Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 23

Graphically illustrate the profit curve developed in Problem. Indicate the optimal price and the maximum profit per month.
Problem
The Hickory Cabinet and Furniture Company makes chairs. The fixed cost per month of making chairs is $7,500, and the variable cost per chair is $40. Price is related to demand, according to the following linear equation:
v = 400 - 1.2 p
Develop the nonlinear profit function for this company and determine the price that will maximize profit, the optimal volume, and the maximum profit per month.