A firm is planning to manufacture a new product. As the selling price is increased, the quantity that can be sold decreases. Numerically the sales department estimates: P= $475-0.250 where P= selling price per unit Q = quantity sold per year On the other hand, management estimates that the average unit cost of manufacturing and selling the product will decrease as the quantity sold increases. They estimate C = $48Q+$22,500 where C= cost to produce and sell Q per year The firm's management wishes to maximize profit. What quantity should the decision makers plan to produce and sell each year and what profit will be earned?

A firm is planning to manufacture a new product. As the selling price is increased, the quantity that can be sold decreases. Numerically the sales department estimates: P= $475-0.250 where P= selling price per unit Q = quantity sold per year On the other hand, management estimates that the average unit cost of manufacturing and selling the product will decrease as the quantity sold increases. They estimate C = $48Q+$22,500 where C= cost to produce and sell Q per year The firm's management wishes to maximize profit. What quantity should the decision makers plan to produce and sell each year and what profit will be earned?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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