The American Baker’s Association reports that annual sales of bakery goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins.
The American Baker’s Association reports that annual sales of bakery
goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent certain types of cancer. You are the manager of a bakery that produces and packages gourmet bran muffins, and you currently sell bran muffins in packages of three. However, as a result of this new report, a typical consumer’s inverse demand for your bran muffins is now P = 11 – 1.5Q.
If your cost of producing bran muffins is C(Q) = 3.5Q, determine the optimal number of bran muffins to sell in a single package and the optimal package price.
Instruction: Enter your response for the optimal package price rounded to two decimal places.
Optimal package size (in units):
Optimal package price (in dollars):
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