A company estimates that the relationship between. unit price and demand per month for a potential new product is approximated by p= $100.00-$0.10D. The company can produce the product by increasing fixed costs $17,500 per month, and the estimated variable cost is $40.00 per unit.What is the demand that maximizes revenue and the maximum revenue?What is the optimal demand, D*, and based on this demand, should the company produce the new product? Why? (Work out the complete solution by differential calculus, starting with the formula for profit or loss per month.)

Given information Demand function P=100.00-0.10D. Fixed cost=$17500 Variable cost=$40 per unit Cost…

Answered: A company estimates that the…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter9: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 15CQ

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A company estimates that the relationship between. unit price and demand per month for a potential new product is approximated by p= $100.00-$0.10D. The company can produce the product by increasing fixed costs $17,500 per month, and the estimated variable cost is $40.00 per unit.

What is the demand that maximizes revenue and the maximum revenue?
What is the optimal demand, D*, and based on this demand, should the company produce the new product? Why? (Work out the complete solution by differential calculus, starting with the formula for profit or loss per month.)

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