Answer:
r=$14,400
The hotel should charge $120
Explanation:
Revenue (r)= p * n
where,
p = price per item
n = number of items sold
A change in price leads to a change in number sold
A variable to measure the change in p and n needs to be introduced
Let the variable=x
Such that
p + x means a one dollar price increase
p - x means a one dollar price decrease
n + x means a one item number-sold increase
n - x means a one item number-sold decrease
for each $2 price increase (p + 2x) there are 3 fewer rooms are rented (n-3x)
know that at $60 per room, the hotel rents 210 rooms
r = (60 + 2x) * (210 - 3x)
=12,600-180x+420x-6x^2
=12,600+240x-6x^2
r=2100+40x-x^2
= -x^2 +40x+2100=0
Solve the quadratic equation
x= -b +or- √b^2-4ac / 2a
a= -1
b=40
c=2100
x= -b +or- √b^2-4ac / 2a
= -40 +or- √(40)^2 - (4)(-1)(2100) / (2)(-1)
= -40 +or- √1600-(-8400) / -2
= -40 +or- √ 1600+8400 / -2
= -40 +or- √10,000 / -2
= -40 +or- 100 / -2
x= -40+100/-2 OR -40-100/-2
=60/-2 OR -140/-2
= -30 OR 70
x=70
The quadratic equation has a maximum at x=70
p+2x
=60+2(30)
=60+60
=$120
r= (60 + 2x) * (210 - 3x)
={60+2(30)}*{(210-3(30)}
r=(60+60)*(210-90)
=120*120
=$14,400