Question

JMC manufacturers sells 500 units per week at 29 dollars per unit. If the price is reduced by one dollar, 20 more units will be sold. In addition, the cost function for JMC Manufacturers is also given by ?(?) = 40? + 10000

a. To maximize the revenue, find the following:

I. [2 marks]. The number of units sold number of units sold.

II. [2 marks]. The maximum revenue.

b. [2 marks]. Find the value of x that maximizes the profit and determine the corresponding price and total profit for this level of production.

c. [2 marks]. Verify that, at the point of maximum profit, MR = MC.

d. [2 marks]. Rework part (b.) under the condition that the government has imposed a tax of $10 per unit

Answer 1