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An auto manufacturer can manufacture compact cars for an incremental cost of $5,000 apiece. She faces a logit price-response function for sales in the next month, with parameters C = 40,000, b = 0.0005, and p = $12,000. What price will maxi- mize the total contribution? How many cars will she sell during the month? %3D

An auto manufacturer can manufacture compact cars for an incremental cost of $5,000 apiece. She faces a logit price-response function for sales in the next month, with parameters C = 40,000, b = 0.0005, and p = $12,000. What price will maxi- mize the total contribution? How many cars will she sell during the month? %3D

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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3. An auto manufacturer can manufacture compact cars for an incremental cost of $5,000 apiece. She faces a logit price-response function for sales in the next month, with parameters C = 40,000, b = 0.0005, and p = $12,000. What price will maxi- mize the total contribution? How many cars will she sell during the month?
Transcribed Image Text:3. An auto manufacturer can manufacture compact cars for an incremental cost of $5,000 apiece. She faces a logit price-response function for sales in the next month, with parameters C = 40,000, b = 0.0005, and p = $12,000. What price will maxi- mize the total contribution? How many cars will she sell during the month?
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