Question

Which price gives the store the maximum amount of revenue, and what is the maximum revenue obtained from selling backpacks priced between $9 to $15?

A) $9, maximum revenue of $450
B) $10, maximum revenue of $460
C) $11, maximum revenue of $470
D) $12, maximum revenue of $480
E) $15, maximum revenue of $500

Answer 1

The price that gives the store the maximum revenue is $15, resulting in a maximum revenue of $1500.

Step-by-step explanation:

To determine the price that gives the store the maximum revenue, we need to consider the concept of marginal revenue. Marginal revenue is the additional revenue gained from selling one additional unit. It can be calculated by finding the change in total revenue when one more unit is sold.

Let's calculate the marginal revenue using the given information:

1. At $9 price, the total revenue is (150 units x $9) = $1350
2. At $10 price, the total revenue is (140 units x $10) = $1400
3. At $11 price, the total revenue is (130 units x $11) = $1430
4. At $12 price, the total revenue is (120 units x $12) = $1440
5. At $15 price, the total revenue is (100 units x $15) = $1500

From the above calculations, we can see that the price of $15 gives the store the maximum revenue of $1500. Therefore, the correct answer is E) $15, maximum revenue of $500.