Min max: how much of the tax to absorb

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Homework Help Overview

The discussion revolves around a problem involving the pricing of items in relation to tax absorption and its impact on sales volume. The subject area includes concepts from economics and calculus, particularly focusing on profit maximization and the relationship between price, quantity sold, and costs.

Discussion Character

  • Exploratory, Conceptual clarification, Mathematical reasoning, Problem interpretation, Assumption checking

Approaches and Questions Raised

  • Participants explore the relationship between price adjustments due to tax and the resulting changes in the quantity of items sold. There are attempts to define new variables and their implications on the pricing model. Questions arise regarding the interpretation of these variables and the effects of tax on pricing strategies.

Discussion Status

The discussion is active with multiple interpretations being explored regarding how to incorporate tax into the pricing model. Participants are questioning the definitions and roles of various variables, particularly the coefficient representing tax, and how these affect the overall profit equation. Some guidance has been offered regarding the relationship between price and quantity sold, but no consensus has been reached.

Contextual Notes

There are constraints regarding the definitions of variables and assumptions about market behavior. Participants express uncertainty about how to accurately represent the impact of tax on pricing and sales, indicating a need for clearer definitions and relationships among the variables involved.

  • #31
Karol said:
But why:
$$\Pi\prime = x(200-0.01x) - 50x + 20,000 - 0.1x$$
i think it should be:
$$\Pi\prime = x(200-0.01x) - 50x - 20,000 - 10x$$
Yes.
It looks like @MrAnchovy suggests the only change is to include the new 10 cent tax to the cost, ##\ y\,.\ ## The quantities are all in cents and not dollars or other currency, so that should be an "extra" ##\ -10 x\ ## upon subtracting ##\ y\ ## from ##\ x P \,.##

Try it.
 
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  • #32
I tried it and it comes right:
Capture.JPG

Genius
 

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  • #33
  • #34
Karol said:
i think it should be:
$$\Pi\prime = x(200-0.01x) - 50x - 20,000 - 10x$$
You are right
SammyS said:
The quantities are all in cents and not dollars or other currency
Yes, sloppy of me to miss that, thanks!
 

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