What price should be charged in order to maximize profits?

Bob’s Company sells one product with a variable cost of $5 per unit. The company is unsure what price to charge in order to maximize profits. The price charged will also affect the demand. If fixed costs are $100,000 and the following chart represents the demand at various prices, what price should be charged in order to maximize profits?

Units Sold     Price

30,000                $10

40,000                  $9

 50,000                 $8

 60,000                 $7

Question 26 options:

A. $10

B. $9

C, $8

D. $7


 
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