Mattel Manufacturing Company Ltd wants to determine the effectiveness of their pricing decisions for their product Jetty.

As a Consultant, you have been asked to develop cost functions that will assist in arriving at the optimal price that will enable the company to maximize profits. During the year, you were provided with the following demand and costs functions for the product:

P = 28 - Q; where P is the unit selling price and Q is quantity in thousands of units.

TC = Q² + 4Q - 15; where TC is total cost in thousands of dollars.

Required:

2. Find the output at which profit is maximized.
4. Find the optimal price that maximizes profit.
6. Determine the optimal sales revenue.
8. Calculate the maximum profit.
10. Briefly outline two (2)factors to be considered by management when pricing decisions are being made.

Answer rating: 100% (QA)

To determine the output at which profit is maximized we need to find the quantity that corresponds to the maximum profit Profit is calculated as reven... View the full answer