Question

A company can produce a toy bear at a cost of $5 per bear. When the company sells the bears at a price of $34, they can sell 560 bears each week. It is estimated that for every $0.50 decrease in the price, they can sell 20 more bears. Find the price that will maximize the profit for the company.

Answer 1

$290

Explanation:

Costing price of a toy bear = $5.00

Selling price of a toy bear = $34.00

Profit comes from each toy bear = 34.00 - 5.00

= $29.00

Company can sell the number of toy bears each week = 560

The profit for the week = 560 × 29.00 = $16,240

If the company decrease $0.50 in the price.

The new price would be = $34.00 - $0.50

= $33.50

The profit from each bear = 33.50 - 5.00 = $28.50

They can sell 20 more bears.

Now the number of sale of bears = 560 + 20

= 580

Now the profit for the week = 580 × 28.50

= $16,530

The price that will maximize the profit = 16,530 - 16240

= $290