A Company Wants to Know What Price They Should Charge

Multiple Choice

A company wants to know what price they should charge to make the maximum profit on their inexpensive digital watches. They have discovered that if they sell the watches for $1, they can sell 7 million of them, but if they sell them for $2, they can only sell 6 million. Let x be the number of million watches sold at p dollars per watch. Assume that the relationship between x and p is linear and find an equation that gives that relationship. Remember that revenue is price times number of items sold: R = xp . Solve the equation from the previous part for x and substitute the result into the equation R = xp in place of x ( R is in million of dollars) . Graph the equation from previous part on a coordinate system where the horizontal axis is the p -axis and the vertical axis is the R -axis. The highest point on the graph will give you the maximum revenue. What is the maximum revenue?

A) Maximum revenue = $12,000,000 at $6 per watch.
B) Maximum revenue = $33,600,000 at $14 per watch.
C) Maximum revenue = $16,000,000 at $4 per watch.