Hercules films is also deciding on the price of the video release of its film bride of the son of frankenstein. again, marketing estimates that at a price of p dollars it can sell q = 260,000 − 13,000p copies, but each copy costs $4 to make. what price will give the greatest profit?

The profit maximizing price will be $12.

Explanation:

At the price p, the estimated quantity is,

q = 260,000 − 13,000p

The cost of each copy is $4.

Total revenue

=

=

=

Total cost

=

=

= 1,040,000 - 52,000p

Marginal revenue

=

= 260,000 - 26,000p

Marginal cost

= 1,040,000 - 52,000p

= -52,000

The profit will be maximized when the marginal revenue is equal to marginal cost.

Marginal revenue = Marginal cost

260,000 - 26,000p = -52,000

26,000p = 260,000 + 52,000

26,000p = 312,000

p = 12

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answer casual models;