Let's suppose that you have new demand data that changes the original demand equation. Let's assume...
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Let's suppose that you have new demand data that changes the original demand equation. Let's assume that our demand equation has the general form: D(q) = aq² + bq+c. For this set of data, then, with D(q) = -0.00034q²-0.0742q +503, we would have the following values. . a = -0.00034 b= -0.0742 c = 503 What if c drops by 25, and so it changes from 503 to 478, so that the new demand equation is D2(q) = -0.00034q² - 0.0742q + 478? If we were to make this change, then for any value of q, the price per unit that you could charge when selling q items would be $25 lower for D₂(g) than it would be for D(q). So, now take D₂(q), as shown above, to be the new demand equation and then compute the following: A) What is the new quantity of items that will maximize profit? Hint: You will need to start by creating a new profit function that uses this new demand function. Once you have that, then you can utilize the marginal profit function. (Round to the nearest whole item) B) What is the new price per item that will maximize profit? To get your answer, use the rounded quantity in part A. (Why does that make sense?) Hint: Remember you have a new demand function. Answer: Answer: (Round to the nearest cent/penny) C) What is the new maximum amount of profits you can earn with this new variable cost? To get your answer, use the rounded quantity in part A. Hint: Remember that you have a new profit function. Answer: (Round to the nearest DOLLAR) Let's suppose that you have new demand data that changes the original demand equation. Let's assume that our demand equation has the general form: D(q) = aq² + bq+c. For this set of data, then, with D(q) = -0.00034q²-0.0742q +503, we would have the following values. . a = -0.00034 b= -0.0742 c = 503 What if c drops by 25, and so it changes from 503 to 478, so that the new demand equation is D2(q) = -0.00034q² - 0.0742q + 478? If we were to make this change, then for any value of q, the price per unit that you could charge when selling q items would be $25 lower for D₂(g) than it would be for D(q). So, now take D₂(q), as shown above, to be the new demand equation and then compute the following: A) What is the new quantity of items that will maximize profit? Hint: You will need to start by creating a new profit function that uses this new demand function. Once you have that, then you can utilize the marginal profit function. (Round to the nearest whole item) B) What is the new price per item that will maximize profit? To get your answer, use the rounded quantity in part A. (Why does that make sense?) Hint: Remember you have a new demand function. Answer: Answer: (Round to the nearest cent/penny) C) What is the new maximum amount of profits you can earn with this new variable cost? To get your answer, use the rounded quantity in part A. Hint: Remember that you have a new profit function. Answer: (Round to the nearest DOLLAR)
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Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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