Suppose the demand (in thousands) for a toaster is given by 100p−2, where p is the...

Suppose the demand (in thousands) for a toaster is given by 100p−2, where p is the price in dollars charged for the toaster. a. If the variable cost of producing a toaster is $10, what price maximizes profit? Consider prices from $12 to $30, at $2 increments.

Expert Solution

P	Q	VC	TR=P*Q	Profit = TR-VC
12	1198	11980	14376	2396
14	1398	13980	19572	5592
16	1598	15980	25568	9588
18	1798	17980	32364	14384
20	1998	19980	39960	19980
22	2198	21980	48356	26376
24	2398	23980	57552	33572
26	2598	25980	67548	41568
28	2798	27980	78344	50364
30	2998	29980	89940	59960

From the above table we can observe that the profit is maximum at P = $ 30 , So, $30 maximises the profit

Rahul Sunny answered 2 years ago

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