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Create a spreadsheet describing amazon output

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a. Create a spreadsheet describing Amazon's output and pricing choices with respect to the Kindle e-reader. (Use the template from Problem S1 with price equation: P = $294 - 35Q and MC = $126.) Use your spread- sheet optimizer to find the combination of output and price that max- imizes profit.

b. Now include the extra net revenue from e-book sales, $100 per kindle. (Compute this total in cell C7 according to the formula: = 100*B7.) Finally, in cell H7, compute total profit (from both Kindles and e-book sales). What combination of Kindle output and price maximizes Amazon's total profit? Explain why Amazon should cut its price relative to the price in part (b).

Reference no: EM13881093

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