A company has determined that the price and the monthly demand of one of its products are related by the equation D = (400 - P)1/2 , where p is the price per unit in dollars and D is the monthly demand. If the associated fixed costs are $1,125/month, and the variable costs are $100/unit, what is the optimal number of units that should be produced and sold each month to maximize the profit?

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
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A company has determined that the price and the monthly demand of one of its products are related by the equation D = (400 - P)1/2 , where p is the price per unit in dollars and D is the monthly demand. If the associated fixed costs are $1,125/month, and the variable costs are $100/unit, what is the optimal number of units that should be produced and sold each month to maximize the profit?

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