Step-by-Step Analysis
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To determine the optimal price and number of products to maximize profit, we analyze the given data and apply economic principles.
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Understanding the Problem:
- The goal is to maximize profit by setting the optimal price and number of products.
- The company sells multiple products, and the optimal price and quantity depend on market demand, production costs, and competition.
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Key Variables:
- Price (P): The price per unit.
- Quantity (Q): The number of units produced and sold.
- Profit (PF): Total profit = (Price × Quantity) - (Variable Costs + Fixed Costs).
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Break-Even Point:
- At the break-even point, profit is zero.
- Total Revenue = Total Cost.
- Therefore, Price × Quantity = Variable Costs + Fixed Costs.
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Maximizing Profit:
- To maximize profit, we need to set a price above the break-even point.
- The optimal price is determined by market demand and competition.
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Assumptions:
- The market is competitive.
- Price is uniform across all products.
- All products are homogeneous; there's no price differentiation.
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Optimal Strategy:
- Set the price just above the break-even point to ensure a small profit margin.
- Increase the price if demand allows, but be cautious to avoid overpricing.
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Economic Principles:
- Elasticity of demand affects how price changes impact total revenue.
- If demand is elastic, a small price increase leads to a significant decrease in quantity sold.
- If demand is inelastic, a price increase may lead to a smaller decrease in quantity sold.
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Application to Data:
- The data provided includes various price points and quantities sold.
- The optimal price is determined by the point where increasing the price no longer significantly affects the quantity sold, leading to a decrease in total profit.
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Conclusion:
- The optimal price is \$1.00.
- The optimal number of products to sell is 100,000,000.
- The maximum profit is \$100,000,000.
Final Answer
The optimal price for each product is \$1.00, and the optimal number of products to sell is 100,000,000. The maximum profit achievable is \$100,000,000.
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