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Lana71 [14]
3 years ago
9

A company can sell 2000 magazine subscriptions at $40 each. For each $5 increase in the price, it will sell 200 fewer subscripti

ons. What subscription price will provide the maximum revenue for the company?
$55

$40

$45

$50
Mathematics
1 answer:
Olenka [21]3 years ago
4 0

<u>ANSWER</u>

The subscription price of $45 provides the maximum revenue for the company


<u>EXPLANATION</u>

When the price is $40, the company sells 2000 quantities.

The total revenue accrued

=40\times2000


=$80,000


When the price increases to $45 the quantity sold will decrease by 200 magazines which is 2000-200=1800


The total revenue accrued

=45\times 1800


=81000 dollars


When the price increases to $50 the quantity sold will decrease by 200 magazines again which is 1800-200=1600


The total revenue accrued

=50\times 1600


=80000 dollars


When the price increases to $55 the quantity sold will decrease by 200 magazines which is 1600-200=1400


The total revenue accrued

=55\times 1400


=77000 dollars


Hence a subscription price of $45 provides the maximum revenue for the company.



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