ENGINEERING ECO ALANYSIS W/STUDY GUIDE
14th Edition
ISBN: 9780190072537
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 1, Problem 64P
To determine
To analyze: The steps that should be taken by J.
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A company produces and sells luxury goods and is able to control the demand for the product by varying the selling price.
The relationship between price and demand is found to be:
p=10-(42/D^2)+2Dwhere p is the price per unit in million dollars and D is the demand per year. The company is seeking to maximize its profit. The fixed cost is $59 million per year and the variable cost is $25 million per unit. The production capacity is 42 units per year, and the company produces at least 1 unit per month.
1) What is the company’s range of profitable output per year?
A company produces and sells luxury goods and is able to control the demand for the product by varying the selling price.
The relationship between price and demand is found to be:
p=10-(42/D^2)+2Dwhere p is the price per unit in million dollars and D is the demand per year. The company is seeking to maximize its profit. The fixed cost is $59 million per year and the variable cost is $25 million per unit. The production capacity is 42 units per year, and the company produces at least 1 unit per month.a) Derive how to find the number of units that should be produced annually to maximize profit.b) What is the maximum profit per year?c) What is the annual breakeven point?d)What is the company’s range of profitable output per year?
Given that the relationship between the sales price for one of a company’s products and the quantity sold per month is D = 500 – 5p units where D is the demand or quantity sold per month and p is the unit price in dollars. The fixed cost is $1,000 per month, and the variable cost is $20 per unit produced. (a) Determine the optimal number of units that should be produced and sold per month. (b) What is the maximum profit per month related to the product? (c) What is the company’s range of profitable demand? Support your answers graphically.
Chapter 1 Solutions
ENGINEERING ECO ALANYSIS W/STUDY GUIDE
Ch. 1 - Prob. 1QTCCh. 1 - Prob. 2QTCCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8P
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