Question

A CD company has been selling 1200 computer game CDs per week at 18$ each. Data indicates that for each 1$ price increase, there will be a loss of 40 sales per week. If it costs 10$ to produce each CD, what should the selling price be in order to maximize the profit?

Answer 1

Answer:

$29

Step-by-step explanation:

When selling at $18, profit is $8

Profut = (8 + x)(1200 - 40x)

= 9600 + 1200x - 320x - 40x²

= -40x² + 880x + 9600

= -40[x² - 2(x)(11) + 11² - 11²] + 9600

= -40(x - 11)² + 40(11)² + 9600

= -40(x - 11) + 14440

Max revenue hence max when x = 11

Selling price = 18+11 = $29