Question #3656

A real estate firm owns 100 garden type apartments at $400/month. For each $10/ month increase there will be two vacancies with no possibility of filling them. What rent per month will max monthly revenue?

Expert's answer

R is a revenue. If the price is (400+10n) then there will be (100-2n) apartments rented.

R =(100-2n)(400+10n) → max

R' =(40000+200n-20n^{2} )' = 200 - 40n

R' =0 => n=5

R'' = -40 => n=5 - point of maximum

(100-2*5)(400+10*5)=40500

So, max revenue is $40,500 with the price $450/month.

R =(100-2n)(400+10n) → max

R' =(40000+200n-20n

R' =0 => n=5

R'' = -40 => n=5 - point of maximum

(100-2*5)(400+10*5)=40500

So, max revenue is $40,500 with the price $450/month.

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