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# maximum revenue

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Island Publishing Company publishes two types of magazines on a monthly basis: a restaurant and entertainment guide and a real estate guide.
The company distributes the magazines free to businesses, hotels, and stores on Hilton Head Island in South Carolina.
The company's profits come exclusively from the paid advertising in the magazines.
Each of the restaurant and entertainment guides distributed generates \$0,50 per magazine in advertising revenue, whereas the real estate guide generates \$0,75 per magazine.
The real estate magazine is a more sophisticated publication that includes color photos, and accordingly it costs \$0,25 per magazine to print, compared with only \$0,17 for the restaurant and entertainment guide.
The publishing company has a printing budget of \$4000 per month.
There is enough rack space to distribute at most 18000 magazines each month.
In order to entice businesses to place advertisements, Island Publishing promises to distribute at least 8000 copies of each magazine.
The company wants to determine the number of copies of each magazine it should print each month in order to maximize advertising revenue.

Answer this question by giving the maximum revenue.

#### Solution Summary

The maximum revenue is clearly expressed.

\$2.19

## Managerial Economics: Calculating Maximum Profit and Revenue

A monopolist's demand function is given by
P = 80-3Q
(with MR = 80-6Q).

Its total cost function is
TC = 20Q + 200
(with MC = 20).

(i) Using algebra determine the profit maximizing output, price and optimal profit for the firm.

(ii) Suppose that instead of maximizing profit, the firm wants to maximize total revenue. Using algebra determine the optimal output, price, profit and revenue for the firm.

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