Question

ork must be shown to earn full credit. may use a calculator and the provided formula sheet on this exam. The Better Baby Buggy Co. has just come out with a new model, the Turbo. The market research department predicts that the demand equation for Turbos is given by ) q =-4p + 288, e q is the number of buggies the company can sell in a month if the price ) At what price should it sell the buggies to get the largest revenue? is Sp per buggy What is the largest monthly revenue?

Answer 1

"monthly revenue (R) = pq = p(-4p + 288) = -4p"" + 288p For revenue to be maximum or minimum = 0 dpi.e.-(-4p2 + 288p) = 0 -4(2p) + 288(1) = 0 8p = 288 p = 36 (-8p + 288) = -8 < 0 So, at p = 36 revenue is maximum i.e (largest) dp dp a) AT $36 revenue is largest b) Largest revenue = R{36) = -4(36)2 + 288(36) = -5184 + 10368 = $5184"