Suppose there are x price decreases.
so, price is 400-x
membership is 300+3x
revenue is thus (400-x)(300+3x)
= -3x^2+900x+120000
So, just find the vertex of the parabola to determine price and max revenue.
A club currently has
300
members who pay
$ 400
per month for membership dues. The club's board members want to increase monthly revenue by lowering the monthly dues in hopes of attracting new members. A market research study has shown that for each
$ 1 decrease in the monthly membership price, an additional
3 people will join the club. What price should the club charge to maximize revenue? What is the maximum revenue?
2 answers
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