Question

Adam makes and sells birdhouses at local craft fairs. He has been selling about 36 each weekend if he charges $10.00 each. He has found that if he raises his price to $12.00 he sells 6 less birdhouses each weekend. Each birdhouse costs him $3.00 to make. Find the price he should charge to maximize his revenue. Find the price he should charge to maximize his profit.

Answer 1

The revenue for each is $360.

10 x 36 = $360

12 x 30 = $360

But the profits vary because:

36 x 3 = $108 <---- this is how much it costs to make 36 birdhouses.

30 x 3 = $90

360 - 108 = $256

360 - 90 = $270

Therefore, selling 30 birdhouses for $12 each weekend nets Adam a higher profit.