Optimal number of bran muffins to sell in single package

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Reference no: EM131193760

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 = 10 - 1.5Q.

If your cost of producing bran muffins is C(Q) = 1.5Q, determine the optimal number of bran muffins to sell in a single package and the optimal package price.

Instruction: Round your answer for the optimal package price to two decimal places.

SHOW ALL STEPS:

a) Optimal package size: _____________units

b) Optimal package price: $_______________

Reference no: EM131193760

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