Question

A manufacturer of a certain brand of appliance estimates that he can sell 5000 units a year at Php 900.00 each and that he can sell 1500 units more per year for each Php 100.00 decrease in price? What price per unit will give the greatest returns?

Answer 1

Answer: Php 800 per unit will given the greatest returns.

Explanation:

Since we have given that

Number of units = 5000

Cost of each unit = Php 900.00

Total cost would be

`5000* 900\\\\=Php\ 4500000`

If it increased by 1500 units.

So, the number of units = 5000+1500=6500

cost is decreased by Php 100.00

So, cost becomes 900-100=Php 800

So, total cost would be

`6500* 800\\\\=Php\ 5200000`

So, Php 800 per unit will given the greatest returns.

Answer 2

First solve the return in each price per unit

Return = number units sold x price per unit

Return1 = 5000 units x Php 900

Return1 = php 4,500,000

Next is solve the other price per unit

Return2 = number units sold x price per unit

Return2 = (5000 + 1500 units0 x ( php 900 – 100)

Return2 = php 5,200,000

So the php 800 per unit will have greater return