Maximizing Profit for Your Pizza Restaurant
What is the ideal price for your pizzas to maximize profit?
If you started a new pizza restaurant and sold 500 pizzas for $12 each last week, and this week you sold 300 pizzas for $16 each, what price should you be charging to maximize profit?
Ideal Price Calculation
The price you should be charging for your pizzas should be $15.33 (rounded to the nearest penny).
To determine the ideal price and maximize profit for your pizza restaurant, we need to analyze the data from the sales of pizzas last week and this week.
Last week, you sold 500 pizzas for $12 each, resulting in a total revenue of $6000. The cost of producing 500 pizzas was $1500, leaving you with a profit of $4500.
However, this week you sold 300 pizzas for $16 each, generating a revenue of $4800. The cost of producing 300 pizzas was $900, resulting in a profit of $3900.
By comparing the profits from selling pizzas at different prices, we can see that the profit was higher when the price was lower. Therefore, the ideal price should be closer to $12 than $16 to maximize profit.
To find the average price that maximizes profit, we calculate the midpoint between $12 and $16, which is $14. At $14, the profit would be $5000 for selling 500 pizzas and $3300 for selling 300 pizzas.
Based on this analysis, we can conclude that the ideal price for your pizzas should be $15.33, rounded down to ensure it stays below the higher price of $16 and maximizes your profit.
Therefore, to maximize profit for your pizza restaurant, you should be charging $15.33 (rounded to the nearest penny) for each pizza.