Question
Think of yourself as a Big Mall entrepreneur who sells 1,000 cupcakes a day for $3 each. When you raised the price to $4.00 each,
Think of yourself as a Big Mall entrepreneur who sells 1,000 cupcakes a day for $3 each. When you raised the price to $4.00 each, the sale plummeted to 900 cupcakes a day. Now, let's say there's a linear relationship between the price and the number of cupcakes sold. Furthermore, assume that there is a fixed cost (overhead) of $500 per day and the cost of each cupcake is $1.50. What would be the price of a cake for maximum profit?(Hint: First determine the linear relationship of the number of units sold per day (n) to the unit price (x). Once you have n in terms of x, the profit y = Income (from selling cakes) - cost - overhead. The task is to find x for maximum y.)
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