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What price should set for dog toys

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Reference no: EM132586024

Suppose you run a small business that makes and sells dog toys. Over many years of operation you've figured out that the monthly demand curve for your dog toys can be represented algebraically by the equation Qdemanded = 100 - 2P , where Q is the number of toys your customers demand each month as a function of P the price you charge.

The marginal cost of production for your toys is constant at €2. (I.e., it costs you €2 to make each toy regardless of how many you make.)

Question 1: To maximize your monthly profits, what price should you set for your dog toys?

Question 2: If you know that you also had fixed costs of €400, would that change your answer?

Reference no: EM132586024

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