The demand equation for Widgets can be assumed to be P = 1,350 – 150 where P is the price per unit and Q is the integer number of Widgets sold. The factory for Widgets has annual fixed costs amountin 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 P is the price per unit and Q is the integer number of Widgets sold. The factory for Widgets has annual fixed costs amountin 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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Question

The demand equation for Widgets can be assumed to be
P = 1, 350
150
where P is 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?)

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