Determine how much money the restaurant should charge per slice of pizza in order to maximize their revenue and state and identify the maximum revenue.

Question

A pizza restaurant sells about 80 slices of pizza each day during lunch when it charges $2 per slice. For each $.25 increase in price, about 5 fewer slices are sold. Determine how much money the restaurant should charge per slice of pizza in order to maximize their revenue and state and identify the maximum revenue.

Answer 1

we begin with 80 slices/day at $2.00/slice

then, we construct a table showing the decrease in unit sales coupled with the increase in unit price

the result is:

80s/d x $2.00/s = $160/d

75s/d x $2.25/s = $168.75/d

70s/d x $2.50/s = $175.00/d

65s/d x $2.75/s = $178.75/d

60s/d x $3.00/s = $180.00/d

55s/d x $3.25/s = $178.75/d

50s/d x $3.50/s = $175.00/d

 

so, maximum revenue will be reached at 60 slices per day times $3.00 per slice, and that number will be $180.00 per day