Consider a manufacturer making leather cases with a market demand function (weekly) given by P=95-Q/Q+1 +5, where Q is the number of leather cases. (A) Show that this function is consistent with the law of Demand (i.e. that when Q increases, P decreases). (B) The manufacturer has weekly fixed costs of $20 and variable costs of $5 per leather case. Formulate the profit function from this information. (C) Locate the sta
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Consider a manufacturer making leather cases with a
P=95-Q/Q+1 +5, where Q is the number of leather cases.
(A) Show that this function is consistent with the
(B) The manufacturer has weekly fixed costs of $20 and variable costs of $5 per leather case. Formulate the profit function from this information.
(C) Locate the stationary points and determine the optimal Q that maximises the profit. (Use the first derivatives test to classify any stationary point).
Profit refers to the difference between total revenue and total costs when producing and selling a product .
Profit = Total Revenue - Total Cost
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