A company is considering alternatives for improving profits - 94919

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  • From: Economics, Macroeconomics
  • Posted on: Wed 20 Jan, 2016
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A company manufactures a product in the U.S and sell it in England. The unit cost of manufacturing is $50. The current exchange rate (dollars per pound) is 1.51. The demand function, which indicates how many units the company can sell in England as a function of price (in pounds) is of the power type, with constant 27556769 and exponent -2.4. a. Develop a model for the company's profits (in dollars) as a function of the price it charges (in pounds). Then use a data table to find the profit maximizing price to the nearest pound. b. If the exchange rate varies from its current value, does the profit maximizing price increase or decrease? Does the maximum profit increase or decrease.
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