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A deli sells 480 sandwiches per day at a price of $6 each. (A) A market survey shows that for...

Question:

A deli sells 480 sandwiches per day at a price of $6 each.

(A) A market survey shows that for every $0.10 reduction in the price, 40 more sandwiches will be sold. How much should the deli charge in order to maximize revenue?

(B) A different market survey shows that for every $0.20 reduction in the original $6, 5 more sandwiches will be sold. Now how much should the deli charge in order to maximize revenue?

Now the deli should charge $_____ for a sandwich to maximize revenue.

Maximizing Revenue:

Problems like the one above are quite common in economics, fortunately, there is a fairly simple straightforward way to solve them. First, we need to think a bit about what is actually happening so that we can get a revenue equation, then we can use differentiation to find the max revenue.

Answer and Explanation: 1

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Part A

Right now we sell 480 sandwiches when they are priced at $6 each. Now, we know that for every 10 cent drop in price, we sell an additional 40...

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Using Differentiation to Find Maximum and Minimum Values

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Chapter 9 / Lesson 4
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If you are shot out of a cannon, how do you know when you've reached your maximum height? When walking through a valley, how do you know when you are at the bottom? In this lesson, use the properties of the derivative to find the maxima and minima of a function.


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