(a)
To find:The selling price that will maximize the yearly profit.
(a)
Answer to Problem 36E
The selling price that will maximize the yearly profit is
Explanation of Solution
The selling price is calculated as,
Plot the graph of the above function.
Figure (1)
From the graph, the maximum profit occurs at,
Therefore, the selling price for the maximum profit is
(b)
To find: The risk of determining the selling price by this method.
(b)
Answer to Problem 36E
The risk of determining the selling price by this method is stated below
Explanation of Solution
The risk associated are:
The demand equation is not exact, therefore, the results are not exactly as expected by the formula.
The formula is based on statistical data analysing consumer demand, that changes as much as weather. By the time the goods are produced the demand may change which will greatly affect the result.
Therefore, the risk of determining the selling price by this method are stated above.
Chapter 3 Solutions
Advanced Mathematical Concepts: Precalculus with Applications, Student Edition
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