The manager of a 100 unit apartment complex knows from experience that all units will be occupied if the rent is $600 per month. A market survey suggests that, on average, one additional unit will remain vacant for each $10 increase in rent. What rent should the manager charge to maximize revenue?

Question

Oscar Hull

Business

18 January, 17:30

The manager of a 100 unit apartment complex knows from experience that all units will be occupied if the rent is $600 per month. A market survey suggests that, on average, one additional unit will remain vacant for each $10 increase in rent. What rent should the manager charge to maximize revenue?

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Tripod · Answer 1

The manager should charge $800 per month. At this level, there would be 80 occupants and the total rent would be 64,000. This is the highest revenue level. At 810, profits start to decrease.