A General Motors executive is considering how to price the 2013 Chevy Volt electric car in order to maximize profits for the company. Manufacturing each Volt involves $9,500 of materials $12,500 of labor $3,800 of shipping and $4,000 of other supplies. The Detroit facility where the Volt is manufactured has $12.5 milliion of fixed costs. The marketing department says that adding a Bose sound system would boost demand, but it would cost an additional $750 per unit.
The quantity demaded at each per unit price is as follows:
Price Quantity Demanded (no Bose) Quantity Demanded (With Bose)
- $29,000 14,000 16,800
- $30,000 11,200 13,440
- $31,000 8,960 10,752
- $32,000 7,168 8,602
- $33,000 5,734 6,881
- $34,000 4,588 5,505
- $35,000 3,670 4,404
- $36,000 2,936 3,523
- $37,000 2,349 2,819
- $38,000 1,879 2,255
- $39,000 1,503 1,804
- $40,000 1,203 1,443
What profit maximizing strategy should she choose?