A potter can sell 120 bowls per week at $4 per bowl. For each 50 cent decrease in price, 20 more bowls are sold. What price should be charged to maximize revenue?

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Answer 1 · 2018-08-06T08:43:23

$$3.5$ for each bowl (for maximum profit)

Step by step evaluation:

$$4times120 = $480$ at $$4$ for each bowl.

$$3.5times140 =$490$ at $$3.5$ for each bowl.

$$3times160=$480$ at $$3$ for each bowl.

$$2.5times180 = $450$ at $$2.5$ for each bowl.

Maximum profit will be obtained at a price of $$3.5$ .

Check:

What if one bowl is sold $$3.75$ ?

$$3.75times130 = $487.5$ It is lower than the maximum profit.