TTV Corporation's Managers Estimate That a 50% Increase in Price

question 63

Multiple Choice

TTV Corporation's managers estimate that a 50% increase in price would cause an 80% reduction in the quantity of product sold. Total fixed costs for the product are $5,000 and total variable costs are $4,000, based on production of 400 units. The following values may be useful: ln (0.2) = -1.609 ln (1.5) = 0.405
Ln (0.5) = -0.693 ln (4,000) = 8.294
Ln (0.8) = -0.223 ln (5,000) = 8.517
TTV's profit maximizing price is:

• A)$2.44
• B)$3.37
• C)$7.57
• D)$13.36

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Definitions:

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