The demand equation for Widgets can be assumed to be P = 1,350 – 150 where P is the price per unit and Q is the integer number of Widgets sold. The factory for Widgets has annual fixed costs amountin P11,200,000. Each Widget has a manufacturing cost of P750. Determine the maximum profit possible. 1) How many Widgets should be sold to maximize profit? 2) What should be the price to maximize profit? (Hint 1: you need algebra and calculus) (Hint 2: how do you determine maxima given a quadratic equation?)

The demand equation for Widgets can be assumed to be P = 1,350 – 150 where P is the price per unit and Q is the integer number of Widgets sold. The factory for Widgets has annual fixed costs amountin P11,200,000. Each Widget has a manufacturing cost of P750. Determine the maximum profit possible. 1) How many Widgets should be sold to maximize profit? 2) What should be the price to maximize profit? (Hint 1: you need algebra and calculus) (Hint 2: how do you determine maxima given a quadratic equation?)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter18: Asymmetric Information

Section: Chapter Questions

Problem 18.3P

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