Question

1. You have a home business selling designer necklaces. You have done

some market research, which shows that at a price of $40 you can sell
500 per week, and at a price of $60 you can sell 400 per week. Assuming
that the relationship between price and quantity sold is linear, find the
price that maximizes revenue. You must use methods that we developed
and practiced in the course. You will be graded not only on your answer
but on the clarity of your presentation.

Answer 1

The price that maximizes the profits from the sale of the product is $60.

Explanation:

Since selling necklaces at $ 40 allows a total amount of 500 sales per week, while a price of $ 60 allows 400 sales at the same time, the following calculations must be made to determine the price that maximizes sales performance:

40 x 500 = $ 20,000

60 x 400 = $ 24,000

50 x 450 = $ 22,500

55 x 425 = $ 23,375

58 x 410 = $ 23,780

59 x 405 = $ 23,895

As can be seen from the calculations developed, the price that maximizes the profits from the sale of the product is $60.