If the company reduces the price by 5%, it can produce and sell as many units as it desires. How many units the company should produce to maximize its profit?
Explanation:
The new reduced price = 0.95 × 125 = 118.75
Profit = 118.75x – 100x – 9600 = 18.75x – 9600
Profit will be maximum when 18.75x is maximum. As the maximum production capacity is 2000 units, profit is maximum when 2000 units are produced.
Hence, option (e).
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