Find the price that will maximize profit for the demand and cost functions, where p is the price, x is the number of units, and C is the cost.

Question

Demand Function: P= 3/x

Cost Function: C=0.8x+800

Answer 1

P = 1.6 = profit maximizing price

Revenue = Px = (3/sqrx)(x)= 3sqrx

R' = 3/2sqrx = C' = 0.8

sqrx = 3/2(.8) = 3/1.6

P=3/sqrx =3/3/1.6 = 1.6