Compute the firms optimal output-price and profits

Reference no: EM13686997

War Games, Inc. produces games that simulate historical battles. The market is small however loyal and War Games is the largest manufacturer. The company is now thinking about introducing a new game in honor of the sixtieth anniversary of the outbreak of World War II. Based on historical data regarding sales, War Games management forecasts demand for this game to be P = 200 - 0.002 Q, where Q denotes unit sales per year and P denotes the price in dollars. The cost of manufacturing (based on royalty payments to the designer of the game and the cost of printing and distribution) is C = 125,000 + 15 Q.

1. If the goal of War Games is to maximize profits, compute the firm’s optimal output, price, and profits?

2. If instead, the company’s goal is to maximize sales revenues, what is its optimal price and quantity?

Reference no: EM13686997

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