Pricing Decisions

Bolton Manufacturers Ltd produce and sell a single product in a very competitive market. In its bid to determine the optimal price for its product the company employed the services of a professional statistical firm to develop a cost function that would determine the optimal price for the product. The following costs functions were created:

P = 400 6Q; where P is the unit selling price and Q is quantity in thousands of units.

TC = 8Q² + 36Q + 150; where TC is total cost in thousands of dollars.

Required:

1. Determine the output level that would maximize profits for Bolton Manufacturers Ltd.
2. Compute the optimal price per unit that Bolton Manufacturers Ltd should charge for its product.
3. Calculate the revenue that would maximize profits for Bolton Manufacturers Ltd
4. Calculate the maximum profit for Bolton Manufacturers Ltd.