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Unformatted text preview: In the past, they found that when they priced at $450 the demand was 250 and when they priced at $350 the demand was 500. Do you think $400 is a good price? Why or why not? If not, what price would you recommend? 5. An auto manufacturer can manufacture compact cars for an incremental cost of $50000 each. She faces a logit priceresponse function for sales in the next month where market saturation is 40,000 cars, b=0.0005, and market price is $12000. What price will maximize total contribution? How many cars will she sell during the month? 6. Suppose unit cost is $5 and price response is linear (as shown below). Find the optimal single price to charge and the total margin at that price. p p d 500 10000 ) (=...
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This note was uploaded on 04/14/2009 for the course ISYE 4803 taught by Professor Staff during the Spring '08 term at Georgia Institute of Technology.
 Spring '08
 Staff

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