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A country park sells annual permits to its fishing lake. Last year, the county sold 300 fishing permits for $75 each. This year, the park is considering a price increase. They estimate that for each $3 increase, they will sell 10 fewer annual fishing permits. How much would the park have to charge for each permit in order to maximize its revenue from fishing permits?

A. $75
B. $78
C. $81
D. $84
E. $87

User MicBehrens
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1 Answer

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Final answer:

To maximize revenue from the sale of fishing permits, the country park should charge $84 per permit. This is calculated by setting up a revenue function based on the price increase and the decrease in the number of permits sold, then finding the vertex of the parabola that this function represents.

Step-by-step explanation:

To determine the price at which the country park should charge for a fishing permit to maximize revenue, we set up a revenue function. Let x be the number of $3 price increases. If they sell 300 permits at $75 each without any price increase, the original revenue is 300 times $75. With each $3 increase in price, they lose 10 customers. Therefore:

Revenue = (Number of Permits Sold) × (Price per Permit)

Revenue = (300 - 10x) × (75 + 3x)

To find the maximum revenue, we need to determine the vertex of the parabolic function defined by this revenue equation. The x-coordinate of the vertex can be found by -b/(2a) from the standard quadratic form ax^2 + bx + c. First, let's multiply out our revenue equation and get it in standard form:

Revenue = 22500 + 210x - 30x^2

Comparing this to the standard form, we identify a = -30, b = 210, and c = 22500. The x-coordinate of the vertex is -b/(2a):

x = -210 / (2 × -30)

x = -210 / -60

x = 3.5

Since x represents the number of $3 increases, and we can't have a half of a price increase, we round down to 3 (ensuring we don't surpass the maximum). Therefore, the park should increase the price by 3 × $3 = $9.

The maximum revenue price per permit is then $75 + $9, which is $84.

User Wallyk
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