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I revise this question too much time but cant understand..plz help…
Market research into demand for the product indicates that when the selling price per unit is $145,demand in each period will be 5000 and if the price is $120,demand will be 11250 units.It is assumed that the demand function is linear.The variable cost per unit is $27
What selling price should be charged in order to maximise the profit??
i know the price equation is P=a-bq ….But i cant able to find the a=Price when demand is 0b = (145 – 120) / (11250 – 5000) = 0.004
a = 145 + (0.004 x 5000) = 165
( or, if you prefer, a = 120 + (0.004 x 11250) = 165 )
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Many many thanks sir for your help
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