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Normally the selling price of a product, p, is related to the demand according to the following relationship: p = a - bD.However, a company has found that the price (in dollars) of its product can be related to demand, D, according the following different equation:
p = 88.5 - 0.08(D0.75)
Demand is given in units per year. In addition, there is a fixed cost of $40,000 per year and a variable cost to manufacture the product is $40 per unit.
Determine the levels of demand that maximizes (a) total revenue, and (b) profit for this product.
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