What price do you recommend that lancia charge in order

Reference no: EM133395921

Question: The Italian car manufacturer Lancia (currently a subsidiary of FCA Italy SpA), is considering reviving its once iconic "Delta" model. Given that this would be a 10-year absence since the Delta's last production-run, Lancia is unsure how to price the new vehicle and hires you to assist. Lancia estimates demand for the vehicle to be:

Q = 500 - 5P (or P = 100 - 0.2Q)

where Q is quantity (in thousands) of Lancia Delta cars sold and P is the price (in thousands) of US Dollars. If marginal cost = 20 (thousands of US Dollars), what price do you recommend that Lancia charge in order to maximize profits?

Reference no: EM133395921

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