company produces CNC machines. The fixed cost is ($F) per month, and the variable cost is ($v)
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Question:
company produces CNC machines. The fixed cost is ($F) per month, and the variable cost is ($v) per unit. The selling price per unit is p = $ [a - b (D)] where (D) is the demand quantity, (a) is the intercept on the price axis and (-b) is the slope. Thus, b is the amount by which demand increases for each unit decrease in price p. Both a and b are constants, For this situation,
a. Assume reasonable values for F, v, a and b
b. Determine the demand for the maximum revenue and determine the profit at this demand.
c. Determine the optimum demand for this product and determine the profit at this demand.
d. What is the range of profitable demand?
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