When the Price of a Glass of Lemonade at a Lemonade

question 44

Multiple Choice

When the price of a glass of lemonade at a lemonade stand was $1.75, 400 glasses were sold. When the price was lowered to $1.50, 500 glasses were sold. Assume that the demand function is linear and that the marginal and fixed costs are $0.10 and $ 25, respectively. Find the profit P as a function of x, the number of glasses of lemonade sold.

• A) \(P = - 0.0025 x ^ { 2 } + 2.65 x - 25\)
• B) \(P = 0.0025 x ^ { 2 } + 2.65 x - 25\)
• C) \(P = - 0.0025 x ^ { 2 } + 2.65 x + 25\)
• D) \(P = 0.0025 x ^ { 2 } - 2.65 x - 25\)
• E) \(P = - 0.0025 x ^ { 2 } + 2.65 x + 25\)

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Definitions:

Reservation Price

The highest price a consumer is willing to pay for a particular good or service, reflecting the limit of their willingness to purchase.

Expected Revenue

The total amount of money anticipated to be received from sales of goods or services, based on expected sales volumes and prices.

English Auction

A common auction format where the price starts low and is bid upwards by participants, with the item being sold to the highest bidder.

Reservation Price

The top price a consumer agrees to pay for a product or service.