Consider demands as units sold. Create columns for price, demand, revenue, costs, and profits. Use a table and a graph with $ on the y-axis and Demand on the x-axis to find the price at which profit is maximized.

Uncategorized by Geoffrey

Individual Lab 8

 

Instructions

  1. Build the model for profit model for gaming mouse in R.
  2. Answer questions 1-16 to the Rmd model.

 

Model

A manufacturer of wireless gaming mouse is preparing to set the price on a new model. Demand (D) is thought to depend on the price (P) and is represented by the model:

D = 2500 – 3P

The accounting department estimates that the total costs (C) can be represented by

C = 6000 + 4D

Develop a model for the total profits (Revenues minus Costs) and represent it on an Excel spreadsheet. Consider demands as units sold. Create columns for price, demand, revenue, costs, and profits. Use a table and a graph with $ on the y-axis and Demand on the x-axis to find the price at which profit is maximized.

 

 

Questions to Answer

 

  1. When the price for the gaming mouse is set to $100, what is the corresponding prediction for demand?
  2. When the price for the gaming mouse is set to $100, what is the corresponding projected revenue?
  3. When the price for the gaming mouse is set to $100, what are the corresponding costs?
  4. When the price for the gaming mouse is set to $100, what are the corresponding projected profits?
  5. Build a column in Excel for Price and consider price in $10 increments from $50 to $600. (This means your column should have $50, $60, $70, $80, etc. all the way to $600.) At what price for the gaming mouse is projected demand minimized?
  6. At what price for the gaming mouse is projected demand maximized?
  7. At what price for the gaming mouse is projected profit maximized?
  8. At what price for the gaming mouse is projected revenue maximized?
  9. True/False: Costs are projected to increase as the price for gaming mouse goes up.
  10. True/False: The lower the price for the gaming mouse, the higher the projected demands.

Additional Questions to Include in Rmd file

  1. Graph Profits on your chart; include the series using a line or scatterplot.
  2. Graph Revenues on your chart; include the series using a line or scatterplot. 13. Graph Costs on your chart; include the series using a line or scatterplot.
  3. Include an x-axis label on your chart.
  4. Include a y-axis label on your chart.
  5. Include a title on your chart.