In an opera theater. there are 300 seats available.

I'm not a big fan of this question. The only approach (without using techniques that are out of scope for the GMAT) is TEST THE ANSWERS, and the great thing about most GMAT math problems is that they can be solved using more than 1 approach.

To see what I mean, consider this algebraic approach:

Let x = the number of dollars added to the price of the ticket.
So, the new ticket price = 60+x dollars.

For every $1 increase in the price of the ticket, the number of seats sold decreases by 2.
So, 300-2x = the number of seats sold.

Revenue = (ticket price)(# seats sold)
So, revenue = (60+x)(300-2x)
Expand to get: revenue = 18,000 + 300x - 120n - 2x²
Simplify and rearrange to get: revenue = -2x² + 180x + 18,000
So our goal is to find the value of x that MAXIMIZES the value of -2x² + 180x + 18,000

1) One approach is to use calculus and find the derivative of -2x² + 180x + 18,000 and blah blah blah...(OUT OF SCOPE!)

2) Another approach is to recognize that y = -2x² + 180x + 18,000 represents a downward parabola AND the coordinates of the vertex (at the TOP of the parabola) represent the information that MAXIMIZES profits.
So, let's use approach #2 and try to determine the vertex of the parabola described by y = -2x² + 180x + 18,000
We'll use a process called COMPLETING THE SQUARE (which is also beyond the scope of the GMAT) [more on completing the square here https://www.mathsisfun.com/algebra/compl ... quare.html]

Start with: y = -2x² + 180x + 18,00
Factor -2 from first two terms to get: y = -2(x² - 90x) + 18,000
Complete the square to get: y = -2(x² - 90x + 2025 - 2025) + 18,000
Expand and remove -2025 from brackets to get: y = -2(x² - 90x + 2025) + 4050 +18,000

NOTE: Through our handwork, x² - 90x + 2025 is a square that can be factored!
Simplify and rewrite to get: y = -2(x - 45)² + 22,050
Now that we've rewritten our equation in this nice form, we can see that the vertex of the parabola has coordinates (45, 22050)

22050 is the HIGHEST POINT of the parabola, which means the MAXIMUM revenue is $22,050
45 is the value of x that achieves this maximum revenue
So, to maximize revenue, we must add $45 to the ticket price to get $60 + $45 = $105

Answer: C

Cheers,
Brent

Hi, Could you please explain how you got the equation?

I understand that the revenue will be (60 + x)(300 - 2x). But how/why are you adding 18000 to this?

Hi All,

Can we solve this by using below equation :

xy = 18000

putting the value of y = 18000/x in below
(x-2)(y+1)

and then using rule of maxima???

Regards,
Abhijit

(60+x)(300-2x)>[60+(x+1)][300-2(x+1)]
(60+x)(300-2x)>(61+x)(298-2x)
4x>178
x>44.5
x=45
60+45=$105

How are you defining x and y here? What do these variables stand for e.g. "Number of ..." ?
Once you think about this, think what do (x - 2) and (y+1) represent? Will their product be the maximum revenue?

we have GM =<AM

(60+x)(300 - 2x ) max? 1/2(120+2x)(300 - 2x) -> leave out the 0.5 and work with the factor including x only

SQRT((120+ 2x)(300-2x))ay =< 1/2 (12+300 +2x - 2x ) - a constant. where have a maximum value for SQRT, therefor the profit under.

Kaplan method states to not start with with middle value. I believe this question is an exception to that rule since it is a parabola that peaks somewhere.
Usually you want to start with B or D and then solve for which ever of the two next that you did not choose.
In normal questions if you start with B and the answer you need is lower then you know it is A.
If the answer is higher test D. By testing D next you know if you are right, too high or too slow and will only ever need to solve for these two.
This method makes it so you often will only have to solve for one value but at most two.
Starting with C you will always have to test two values unless you hit it on the head with C.

The easiest way to solve this question is to know the "function derivative" concept: in order to find the maximum of the defined function - just take the first-level derivative.
Then this question can be solved in less than a minute:
Revenue function will be (60+x)*(300-2x)=60*300+180x-2x^2
Take the first order derivative: -4x+180=0 or x=45
New price= 45+60=105. Answer C

The language of the question is not very clear. It says "When all the seats in the theater are sold out, the price of each ticket is $60.", what does this mean. That at the price of $60 the tickets has been sold out. So the maximum price charged by the theater is $60 and then we have to reverse calculate something.

Please ask the original source to re frame the question to clearly provide the information. It should have been like " The price of each seat is $60. But to increase the revenue he increases price of the seats by $1 for after every 2 seats sold.
itwarriorkarve Please send a message to 800 score to re-frame the question.

Karishma,

I understand that -b/a is the sum of the two roots, but where do you get 2a and how does this give you the maximum value?

The answer is C as follows.

The answer to this question can be derived by using the knowledge of maxima for a quadratic equation.

Based on the conditions given in the question, the equation will be as follows

Let x be the increase in price of the ticket.
Total earning --> (60+x)(300-2x) ==> \(-2x^2 + 180x + 18000\)
Since this is an equation of inverted parabola, it will have its maximum value at -b/2a ==> -180/2*(-2)==>45
So price of the ticket will be 60+45 = 105

Hence answer is C.

I would disregard this question. The makers of the GMAT specifically write questions that do not lend themselves towards mathematical knowledge outside of the scope of the test. For example, this question can be solved in about 15 seconds with calculus. You just take the derivative and set it equal to zero. The GMAT is (quite frustratingly) not a math test, it's a reasoning test. This is just testing if you know basic calculus.

We can let x = the number of $1 increments in price (or the number of 2-seat decrements) and y = total revenue. Thus, the expression (60 + x) is the increased ticket price and (300 - 2x) represents the decreased number of tickets sold at that increased price. Recall that revenue is the product of the ticket price and the number of tickets sold. Thus, we have:

y = (60 + x)(300 - 2x)

Expanding the right-hand side, we have:

y = 18000 + 180x - 2x^2

Notice that the above is a quadratic equation. Let’s rearrange the terms so that it’s in standard ax^2 + bx + c form:

y = -2x^2 + 180x + 18000

We see that the graph of the quadratic equation is a downward parabola, so the maximum revenue is the y-value of the vertex. To get the y-value of the vertex, we must get the x-value of the vertex first, using the formula x = -b/(2a):

x = -180/(2(-2)) = -180/-4 = 45

Thus, to maximize the revenue, the ticket price should be 60 + 45 = $105.

(Note: We are using the term “revenue” instead of “profit” because the amount of money received from sales is technically called “revenue,” not “profit.” As we know, the term “profit” is the difference between revenue and cost. The problem uses the term “profit” instead of “revenue” perhaps because cost is either zero or negligible.)

Answer: C

(300-2x)×(60+x)
=18000+180x-2x^2
find the maximum to the quadratic equation
-2x^2+180x
=-2(x^2-90x+45^2)+2025×2
=-2(x-45)^2+4050
maximum is 4045, since the coefficient is in negative value -2, no matter how the value of
x to be, it must equal or less than 0....
thus x=45, the owner should charge 60+45=105 ans:(C)

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