A Company Wants to Know What Price They Should Charge

question 39

Multiple Choice

A company wants to know what price they should charge to make the maximum profit on their inexpensive digital watches. They have discovered that if they sell the watches for $1, they can sell 7 million of them, but if they sell them for $2, they can only sell 6 million. Let x be the number of million watches sold at p dollars per watch. Assume that the relationship between x and p is linear and find an equation that gives that relationship. Remember that revenue is price times number of items sold: R = xp . Solve the equation from the previous part for x and substitute the result into the equation R = xp in place of x ( R is in million of dollars) . Graph the equation from previous part on a coordinate system where the horizontal axis is the p -axis and the vertical axis is the R -axis. The highest point on the graph will give you the maximum revenue. What is the maximum revenue?

• A)Maximum revenue = $12,000,000 at $6 per watch.
• B)Maximum revenue = $33,600,000 at $14 per watch.
• C)Maximum revenue = $16,000,000 at $4 per watch.

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Definitions:

Posttranslational

Refers to the chemical modifications and processes occurring to a protein after it has been synthesized by ribosomes.

Translational

Pertaining to the process of translating the sequence of a messenger RNA (mRNA) molecule to a sequence of amino acids during protein synthesis.

Posttranscriptional

Pertains to the alterations and processes that RNA molecules undergo after they are transcribed from DNA but before they are translated into proteins.

Transcriptional

Pertaining to transcription, the process by which genetic information from DNA is copied to messenger RNA.