Determining selling price and supply The Whizzer Toy Company has developed a new toy rocket that is expected to sell as a fad item for one season only. The rocket is operated by a fuel capsule that produces a lot of smoke, makes a loud noise, and sends the rocket shooting 500 feet into the air. The company expects that the sale of each kit would produce additional sales of 25 boxes of fuel capsules at $3 per box. Each box contains 10 capsules. The variable cost of each fuel capsule is $.10 and the variable cost of each rocket kit is $50. Market research discloses that the demand schedule for the kits is as shown at the top of the next page.

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REQUIRED Determine the optimum price the company should charge and the supply it should produce for the market.