Question

Some venture capitalists learned in economics that total revenue is the total receipts a seller receives from selling goods to buyers, and that it can be written as P x Q, which is the price of goods times the quantity of goods sold. They hold the plans to the next "hot" technology gizmo that everyone will want to buy. In pricing the item, they made some assumptions: 1) For small quantities purchased, set the price low to invite people to get familiar with the product. 2) For large quantities purchased, set the price low as preferential treatment for your best customers. 3) Limit the number that can be purchased to a maximum of 1000 units. 4) An analyst recommends that the selling price for 500 units be $2500, or you will price yourself out of the market. They have hired you as a consultant to make a recommendation about what the maximum revenue will be for the company under this business plan. Even though the units may be sold in different quantities, the central question to ask is, "If all the purchases involved the same exact number of items, what would be the revenue for the company under that condition, and when would the revenue be as big as possible?" This would provide a ceiling figure to report back to the investors.