Question

When a swimming park owner charges $4.00 for admission, there is an average attendance of 100 people. For every $0.20 increase in the admission price, there is a loss of 2 customers from the average number. What admission price should be charged in order to maximize revenue $?

Answer 1

Answer:

$490

Explanation:

Let xR be the revenue function

xR = (4 + 0.2(x))(100 - 2x) = 400 + 12x - 2x²/5

Maximum revenue occurs when xR = 0:

xR = 12 - 4x/5 = 0

x = 15

Admission price = 4 + (0.2*15) = 4 + 3 = $7

Max revenue = $7 * (100 - (15*2) = 7 *70  = $490