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Determine the optimal number of units to put in a package

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A monopoly is considering selling several units of hotdogs as a single package. A typical consumer's demand for the product is Qd=120 -.25P, and the marginal cost of production is $160.

Question A. Determine the optimal number of units to put in a package.

P=120 -Q/.25

480-4Q=160

320=4Q

Q=80 units

Question B. How much should the firm charge for this package?

.5x80x (Pmax-MC)

.5x80x (480-160) + 12,800

P=12800+12800

P= 25600

Reference no: EM132486261

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