Answer:
Price = $4.50
Maximum revenue = $2,430
Step-by-step explanation:
The concession stand sells 600 bags of peanut at $4.00 (600, $4.00).
If there is a $1 increase in price, the number of bags old will decrease by 120, which mens that 480 bags of peanuts will be sold at $5.00 (480, $5.00).
Tracing a linear relationship between price and quantity sold with the two given points:
The revenue function is given by the price multiplied by the quantity sold:
The value of 'Q' for which the derivate of the revenue function is zero, is the output level for which revenue is maximum:
The total revenue of 540 units at $4.50 per unit is: