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
Question Your portfolio has a beta of 1.18. The portfolio consists of 15% U.S. Treasury bills, 30% in stock A, and 55% in stock B. Stock A has a risk-level equivalent to that o

Q. Explain the Working capital management? Working capital management Working capital management is administration of current liabilities and currentassets.Effective ma

Working capital cycle in a manufacturing business Average time raw materials are in stock   +   Time taken to produce goods   +   Time tak

Question: (a) Distinguish between endogenous and exogenous variables in a simultaneous equation model? b) Write down two equations which can be solved simultaneously, deter

Q. Calculate DR's quick ratio? DR has the following balances under current assets and current liabilities: Current assets $ Current liabilities

What are the four basic elements found in all economic system?

Mary has a weekly allowance of $24 to spend on soda and coffee.  Let 40 cups be the maximum amount of soda she can buy for the money.  Let $.40 be the price of 1 cup of coffee.  As

The new investment has been under consideration since the beginning of January 2008 when the new government of Gujistan first invited companies to submit their proposals to build a

Q. Explain Working capital ratios? Ratios are a way of comparing financial values and quantities to improve our understanding. In particular they are used to assess the perform

Question 1 : Assuming that you are appointed as a consultant to assess the Tertiary education sector in Mauritius in order to do a due diligence on the potential f