Question 2 (20 marks) CLO 3

Target Ltd produces a single product. The company has employed the services of a statistical firm to develop cost functions that will assist in arriving at the optimal price that will enable the company to maximize profits. During November 2018, you were provided with the following demand and costs functions for the product:

Demand function: P=60+2Q, where P is the unit selling price and Q is quantity of units in

thousands.

Cost function: TC= 3Q² - 2Q + 200, where TC is total costs in thousands of dollars.

Required:

1. Find the output at which profit is maximized. (6 marks)
2. Find the optimal price that maximizes profit. (3 marks)
3. Determine the optimal sales revenue (3 marks)
4. Calculate the maximum profit (5 marks)
5. Briefly outline three (3) factors to be considered when setting prices for the companys products. (3 marks)