Maximize total revenue, Financial Econometrics

Assignment Help:

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.

Related Discussions:- Maximize total revenue

Differences in working capital for different industries, Differences in wor...

Differences in working capital for different industries   Manufacturing Retail Service Inventories Hig

Calculate dr''s quick ratio, Q. Calculate DR's quick ratio? DR has the ...

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

Profitability ratios of the company, Study the following Goget financial st...

Study the following Goget financial statements and answer the questions below. Statement of Comprehensive Income for the year ended 31 Dec 2012

Calculate correlation coefficient, Question The variance of Stock A is ...

Question The variance of Stock A is .004, the variance of the market is .007 and the covariance between the two is .0026. What is the correlation coefficient?

Distinguish between debt finance and equity finance, Question 1: (a) A...

Question 1: (a) As a small island economy , Mauritius had to face a number of constraints in order to transform itself from mono-cop economy into a well diversified midd

Cash flow forecast, Introduction - Overview of the business idea. A clear o...

Introduction - Overview of the business idea. A clear outline of what you intend to present and why you are presenting it in your chosen method or style Business Plan A clear

Find out the beta of stock, Question Your portfolio has a beta of 1.18...

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

Current ratio for a company, If current ratio for a company is equal to its...

If current ratio for a company is equal to its acid test (that is, quick ratio), then: A: The current ratio must be less than one. B: Working capital is negative. C: Trade

Calculate the standard deviation, You are required to conduct a stock marke...

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

Financial markets and institutions , I have a case study to do for my fina...

I have a case study to do for my financial markets and institutions subject. I''ve been struggling with one of the questions. So I need help if possible, the question is "What do y

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd