a.

Determine a selling price that will maximize the companys yearly profit P.

The yearly profit is the difference between total revenue and production costs.

Consumer demand .

Therefore, the yearly profit function .

Therefore, the yearly profit function .

Draw a coordinate plane.

Graph the profit function .

Observe the graph of the function :

The maximum profit occurs at .

At , .

Therefore, the selling price that will maximize profit is $50.

b.

The risk of determining a selling price using this method : \ \

The companys competition might offer a similar product at a lower cost.

a. The selling price that will maximize profit is $50.

b. The companys competition might offer a similar product at a lower cost.