A city centre tour guide currently charges $27 for a full day's tour. The average number of customers is 32. Market research suggests that for every $1 increase in tour price, the guide can expect to lose 3 customers per tour. (a) If the price increase is $x calculate the expected revenue.

Price = $27 Daily customers = 32 Fall in customers for $1 price increase = 3

Answered: A city centre tour guide currently charges $27 for a full day's tour. The average number of customers is 32. Market research suggests that for every $1 increase…

ENGR.ECONOMIC ANALYSIS

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ISBN: 9780190931919

Author: NEWNAN

Publisher: Oxford University Press

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Question

Can you help me? Can this be handwritten?

A city centre tour guide currently charges $27 for a full day's tour. The average number of
customers is 32. Market research suggests that for every $1 increase in tour price, the guide can
expect to lose 3 customers per tour.
(a) If the price increase is $x calculate the expected revenue.
(b) The guide needs to ensure that the expected revenue is at least $750. By solving a
quadratic inequality, find the range of prices that need to be charged.
(c) What price should be charged to maximise expected revenue?

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