Ahlia Co manufactures mobile phones. It has been extremely successful in the past, but the market has become extremely competitive. The company is considering a number of different strategies to improve its profitability. The most successful product is the Y99 which is sold for $110. Weekly demand is currently 20,000 phones, Market research has revealed that if Ahlia Co reduced the price of the Y99 by $10, demand would increase by 2,000 phones. The product has a constant variable cost per unit of $60. Instructions: 1.Determine the demand function. 2. Determine the output level to maximize profit. 3. Determine the price to be charged to maximize profit.
Ahlia Co manufactures mobile phones. It has been extremely successful in the past, but the market has become extremely competitive. The company is considering a number of different strategies to improve its profitability. The most successful product is the Y99 which is sold for $110. Weekly demand is currently 20,000 phones, Market research has revealed that if Ahlia Co reduced the price of the Y99 by $10, demand would increase by 2,000 phones. The product has a constant variable cost per unit of $60. Instructions: 1.Determine the demand function. 2. Determine the output level to maximize profit. 3. Determine the price to be charged to maximize profit.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Ahlia Co manufactures mobile phones. It has been extremely successful in the past, but the market has become extremely competitive. The company is considering a number of different strategies to improve its profitability. The most successful product is the Y99 which is sold for $110. Weekly demand is currently 20,000 phones,
1.Determine the demand function.
2. Determine the output level to maximize profit.
3. Determine the price to be charged to maximize profit.
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