AMJ Industries is considering offering a waterproof case for the iPhone 7. According to their
market research, a good estimate of demand for their product can be estimated from the
following equation: demand = 20000 - 100p, where p is the retail price of the case. AMJ
management believes this formula holds for prices from $100 to $150. AMJ has also estimated
their unit production costs as $15 for raw materials, $20 for labor, and $25 for marketing and
shipping. If AMJ decides to manufacture the case, they can expect a production setup cost of
$250,000, regardless of the number of phone cases they sell.
How much profit can AMJ expect if they price their phone case at $110?
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