Posted by **Anonymous** on Thursday, March 10, 2011 at 11:13am.

a real estate office manages 50 apartments in downtown building . when the rent is 900$ per month, all the units are occupied. for every 25$ increase in rent, one unit becomes vacant. on average , all units require 75$ in maintenance and repairs each month. how much rent should be real estate office charge to maximize profits?

- optimization calculus -
**Reiny**, Thursday, March 10, 2011 at 12:19pm
let the number of $25 increases be n

new rent = 900 + 25n

number rented = 50-n

profit = (50-n)(900+25n) - 75n

= 45000+275n - 25n^2

d(profit)/dn = 275 - 50n = 0 for max/min of profit

50n = 275

n = 275/50 = 5.5

The question is not clear whether the increases have to be in exact jumps of $25.

if so, then n=5 or n=6 will yield the same profit

e.g.

if n=6, profit = 45000+1650-900 = 45750

if n=5 , profit = 45000+1375-625 = 45750

if a partial increase is allowed, then

n = 5.5

new rent = 1037.50

number rented = 50-5.5 = 44.5 ???? (makes no real sense)

but mathematically profit

= 45000+5.5(275)-25(5.5)^2 = 45756.25

I would go with either n=5 or n=6

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