FG Manufacturers wants to determine the effectiveness of their pricing decisions for their product Lylo. As a consultant, you have been asked to develop cost functions that will assist in arriving at the optimal price that will enable the company to maximize profits. During the year, you were provided with the following demand and costs functions for the product: P = 400 – 6Q; where P is the unit selling price and Q is quantity in thousands of units. TC = 8Q2 + 36Q + 150; where TC is total cost in thousands of dollars. Determine the optimal sales revenue. Calculate the maximum profit. Briefly outline two (2) factors to be considered by managements when pricing decisions are being made.
FG Manufacturers wants to determine the effectiveness of their pricing decisions for their product Lylo. As a consultant, you have been asked to develop cost functions that will assist in arriving at the optimal price that will enable the company to maximize profits. During the year, you were provided with the following demand and costs functions for the product: P = 400 – 6Q; where P is the unit selling price and Q is quantity in thousands of units. TC = 8Q2 + 36Q + 150; where TC is total cost in thousands of dollars. Determine the optimal sales revenue. Calculate the maximum profit. Briefly outline two (2) factors to be considered by managements when pricing decisions are being made.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter11: Price And Output Determination: Monopoly And Dominant Firms
Section: Chapter Questions
Problem 5E
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FG Manufacturers wants to determine the effectiveness of their pricing decisions for their product Lylo. As a consultant, you have been asked to develop cost functions that will assist in arriving at the optimal price that will enable the company to maximize profits.
During the year, you were provided with the following demand and costs functions for the product:
P = 400 – 6Q; where P is the unit selling price and Q is quantity in thousands of units.
TC = 8Q2 + 36Q + 150; where TC is total cost in thousands of dollars.
- Determine the optimal sales revenue.
- Calculate the maximum profit.
- Briefly outline two (2) factors to be considered by managements
when pricing decisions are being made.
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