Revenue and Profit Billy-Sean O’Hagan is John O’Hagan’s son and a freshman in college. He notices that the demand for the college newspaper was 2,000 copies each week when the paper was given away free of charge, but dropped to 1,000 each week when the college started charging 10¢/copy.
a. Write down the associated linear demand function.
b. Use your demand function to express the revenue as a function of the unit price p, and hence determine the price the college should charge for a maximum revenue. At that price, what is the revenue from sales of one edition of the newspaper?
c. It costs the college 4¢ to produce each copy of the paper, plus an additional fixed cost of $200. Express the profit P as a function of the unit price p, and hence determine the unit price the college should charge for a maximum monthly profit (or minimum loss). What is the resulting profit (or loss)?
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