The current manager of a small bicycle shop estimates the demand curve for a child's starter bike to be: P = 80 - 2Q. Costs are given by: C = 200 + 20Q. The former owner of the shop (now retired) urges the manager to keep prices low so as to increase sales and maximize revenue. (The shop pays the former owner 5% of each dollar of earned revenue). If current management follows the former owner's goal, what sales output and price should it set? What strategy would you recommend to maximize profits?

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The Answer of The current manager of a small bicycle shop estimates the demand curve for a child's starter bike to be: P = 80 - 2Q. Costs are given by: C = 200 + 20Q. The former owner of the shop (now retired) urges the manager to keep prices low so as to increase sales and maximize revenue. (The shop pays the former owner 5% of each dollar of earned revenue). If current management follows the former owner's goal, what sales output and price should it set? What strategy would you recommend to maximize profits?

The Current Manager of a Small Bicycle Shop Estimates the Demand