Essay
The current manager of a small bicycle shop estimates the demand curve for a child's starter bike to be: P = 80 - 2Q.Costs are given by: C = 200 + 20Q.The former owner of the shop (now retired)urges the manager to keep prices low so as to increase sales and maximize revenue (The shop pays the former owner 5% of each dollar of earned revenue).If current management follows the former owner's goal,what sales output and price should it set? What strategy can be recommended for the management to maximize profits?
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