Maximize total revenue, Financial Econometrics

The demand equation for Good Y is given by

            P = 900/q - 0.48q + 100       q > 0

In this question use derivatives to explore the relationship between the demand for Good Y, total revenue and elasticity.

Task

  1. Find an expression for the total revenue, TR.
  2. Find an expression for marginal revenue, MR.
  3. Find and interpret the marginal revenue when q = 60
  4. What price must be charged to achieve a demand of q = 60
  5. Find an expression for dp/dq and evaluate at q = 60
  6. Use the relationship  dp/dq = 1/dp/dq and the result of (4) and (5) to determine

     Whether the demand is elastic, unit elastic or inelastic when q = 60, and interpret  the result.

       7. Determine value of q which maximizes total revenue.

       8. What price must be charged to maximize total revenue?

      9. Complete the following table, giving the corresponding rang or value for price and quantity, and whether marginal revenue is positive, negative or zero for corresponding range or value.

Demand

 

Inelastic

 

Unit Elastic

 

Elastic

 

Price

 

 

 

Quantity

 

 

 

Marginal Revenue

 

 

 

Hints:

  • Do Not attempt to obtain an equation for dq/dp in terms of p.
  • A second derivative is required in question 7 to verify a maximum.
  • Graph TR to check/verify your algebraic answers.
Posted Date: 2/19/2013 1:22:24 AM | Location : United States







Related Discussions:- Maximize total revenue, Assignment Help, Ask Question on Maximize total revenue, Get Answer, Expert's Help, Maximize total revenue Discussions

Write discussion on Maximize total revenue
Your posts are moderated
Related Questions
How can economies of scale be a characteristics that makes for a good industry (please be specific) and what industry (besides automobiles) do you consider to be a "good industry"

Q. Calculate ADs working capital cycle? AD, a manufacturing entity, has the following balances at 30 April 2005: Extract from financial statements:      $000 Trade receiv

Q. What is Over-capitalisation? Over-capitalisation This is the opposite of over trading. It means a company has a large volume of inventories, cash balances and trade re

Loudfire Safaris have requested you to prepare a cash budget for the period ending 31 March 2013. The following projections have been made for the next 4 months

You are required to conduct a stock market simulation for a period of  four weeks (week 4 - week 7). This is a group project which may consist of five members only. Each group will

If an investment is expected to return of 5 percent in the future, a $53,000 investment will grow to how much in 22 years?

Pythagoras Jones has just inherited $1,000,000 and wishes to invest this sum in the ?ve funds given below. Fund     Name                                Code               Return

Organisations involved in international trade and investment seek economic and political stability. For this reason it is prudent for those organisations to conduct a country risk

Gabi wishes to purchase an apartment in Berea Johannesburg which is situated in a quiet street. The purchase price, including costs, is R355 000 and she wishes to obtain a 100% mor

Problem 1: (a) Analyze the asset price channels other than the traditional interest rate channel. (b) Analyze Bank lending channel and discuss its importance for the Mau