Maximize the profit it generates from the combines sales

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Reference no: EM13758150

Bill Murray Motors is an auto dealership that specializes in the sale of station wagons and light trucks. Because of its reputation for quality and service, Bill Murray has a strong position in the regional market, but demand remains somewhat sensitive to price. While evaluating the new models, Bill Murray’s marketing consultant has come up with the following demand curves:

Truck Demand = 500 – 0.018 * (Truck Price)

Wagon Demand = 400 – 0.011 * (Wagon Price)

The dealership’s unit costs are $20,000 for trucks and $25,000 for wagons. Each truck requires three hours of prep labor, and each wagon requires two hours of prep labor. The current staff can supply 250 hours of labor.

Determine the prices as which Bill Murray Motors can maximize the profit it generates from the combines sales of trucks and wagons. (Assume that sales can be non-integer.)

Reference no: EM13758150

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