Question

A telephone company in a town has 500 subscribers on its list and collects fixed charges of Rs 300/- per subscriber per year. The company proposes to increase the annual subscription and it is believed that for every increase of Re 1/- one subscriber will discontinue the service. Find what increase will bring maximum profit?

Answer 1

Consider that company increases the annual subscription by Rs. x

Hence, the company should increase the subscription fee Rs. 100, so that it has maximum profit.