Rent-A-Reck Incorporated finds that it can rent 60 cars if it charges $40 for a weekend. It estimates that for each $5 price increase it will rent two fewer cars. What price should it charge to maximize its revenue

We are required to find the price should it charge to maximize its revenue

The price it should charge to maximize its revenue is $38

Equation:

(60 - 2n)(40 + 5n)

open parenthesis

2400 + 300n - 80n - 10n²

2400 + 220n - 10n²

differentiate with respect to n

dR/dn = 220 - 20n

220 - 20n = 0

220 = 20n

divide both sides by n

n = 220/20

n = 11

Revenue maximization price = (60 - 2n)

= 60 - 2(11)

= 60 - 22

= $38

Car rent price = (40 + 5n)

= 40 + 5(11)

= 40 + 55

= $95

Therefore, the price it should charge to maximize its revenue is $38

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$38

Explanation:

Based on the scenario in the question, the equation for the total revenue will be:

= (60 - 2n)(40 + 5n).

It should be noted that the coefficient of increment is represented by n.

Check the attachment for further details.

answer; encouraging the development of innovations by firms attempting to break a monopoly; (creative destruction)

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explanation:

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