The profit associated with the production and sale of a product is the difference between the product's revenue and the co (A) The cost to produce the Rolls-Royce can be estimated at $270 million of fixed costs (factory maintenance, equipment leasing. labor, etc) plus $110000 per vehicle. Write profit P, in thousands of dollars, as a formula involving the price per vehicie, p (in thousands of dolarsi, and q the quanti vehicles produced: (b) in 2011, Rols-Royce sold 3538 cars at an average price per vehicie of $200 thousand. Assume that the demand for these vehicies is proportional the price, p, in thousands of dollars, and write a formula for the quantity of Rolls-Royce vehicies demanded as a function of p. q- D(p) = (a Use the demand model from part (b) to rewite your profit formula trom part (a) so that P is a function of only p. P(p) = (d) At what price does the model predict break even is attained? thousand dollars Price: (e) What is the value of profit at the vertex of the quadratic? Note: This is not the company's maximum profit Why? thousand dollars Maximum

The profit associated with the production and sale of a product is the difference between the product's revenue and the co (A) The cost to produce the Rolls-Royce can be estimated at $270 million of fixed costs (factory maintenance, equipment leasing. labor, etc) plus $110000 per vehicle. Write profit P, in thousands of dollars, as a formula involving the price per vehicie, p (in thousands of dolarsi, and q the quanti vehicles produced: (b) in 2011, Rols-Royce sold 3538 cars at an average price per vehicie of $200 thousand. Assume that the demand for these vehicies is proportional the price, p, in thousands of dollars, and write a formula for the quantity of Rolls-Royce vehicies demanded as a function of p. q- D(p) = (a Use the demand model from part (b) to rewite your profit formula trom part (a) so that P is a function of only p. P(p) = (d) At what price does the model predict break even is attained? thousand dollars Price: (e) What is the value of profit at the vertex of the quadratic? Note: This is not the company's maximum profit Why? thousand dollars Maximum

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 profit associated with the production and sale of a product is the difference between the product's revenue and the cost to produce it.
(a) The cost to produce the Rolls-Royce can be estimated at $270 million of fixed costs (factory maintenance, equipment leasing, labor, etc.) plus
$110000 per vehicle. Write profit P, in thousands of dollars, as a formula involving the prioe per vehicie, p (in thousands of dollars), and q the quantity of
vehicles produced:
(b) In 2011, Rols-Royce sold 3538 cars at an average price per vehicie of $200 thousand. Assume that the demand for these vehicies is proportional to
the price, p, in thousands of dollars, and write a formula for the quantity of Rolls-Royce vehicles demanded as a function of p.
q= D(p) =
(c) Use the demand model from part (b) to rewrite your profit formula from part (a) so that P is a function of only p.
P(p) =
(d) At what price does the model predict break even is attained?
thousand dollars
Price:
(e) What is the value of profit at the vertex of the quadratic? Note: This is not the company's maximum profit! Why?)
thousand dollars
Maximum:

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