The demand equation for Widgets can be assumed to be P - 1, 350 - 150 where Pis the price per unit and Q is the integer number of Widgets sold. The factory for Widgets has annual fixed costs amounting to P11.200,000. Each Widget has a manufacturing cost of P750. Determine the maximum profit possible. 1) How many Widgets should be sold to maximize profit? 2) What should be the price to maximize profit? (Hint 1: you need algebra and calculus) (Hint 2: how do you determine maxima given a quadratic equation?)

The demand equation for Widgets can be assumed to be P - 1, 350 - 150 where Pis the price per unit and Q is the integer number of Widgets sold. The factory for Widgets has annual fixed costs amounting to P11.200,000. Each Widget has a manufacturing cost of P750. Determine the maximum profit possible. 1) How many Widgets should be sold to maximize profit? 2) What should be the price to maximize profit? (Hint 1: you need algebra and calculus) (Hint 2: how do you determine maxima given a quadratic equation?)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

The demand equation for Widgets can be assumed to be
P - 1, 350 -
where Pis the price per unit and Q is the integer number of Widgets sold. The factory for Widgets has annual fixed costs amounting to
150
P11,200,000. Each Widget has a manufacturing cost of P750. Determine the maximum profit possible.
1) How many Widgets should be sold to maximize profit?
2) What should be the price to maximize profit?
(Hint 1: you need algebra and calculus)
(Hint 2: how do you determine maxima given a quadratic equation?)

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