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

Is the investment attractive, During and economic downturn, we can acquire ...

During and economic downturn, we can acquire another company by purchasing its stock for $6 billion. The company is earning $700 million a year, which is available for dividends, a

Masters degree to be financially feasible, If an MBA cost $35,000 and money...

If an MBA cost $35,000 and money can be invested to earn 7 percent, how much does the annual salary for a person holding a masters degree have to exceed that of other college gradu

What effective annual rate of return did you earn, You purchased your house...

You purchased your house 5 years ago for $110,000 and based on recent appraisals it can be sold today for $141,000. What effective annual rate of return did you earn?

What will be the effect of transaction, A company's current assets are less...

A company's current assets are less than its current liabilities. Company issues new shares at full market price. What will be the effect of this transaction upon company's work

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

Mauritian financial system, Question 1: (a) Highlight the main theories...

Question 1: (a) Highlight the main theories of the level and term structure of interest rates. (b) To what extent they can be used to explain the level and structure of inte

What are the major methods of economic forecasting, Question: (a) Why i...

Question: (a) Why is a disturbance term included in a regression? (b) What are the properties of an OLS estimator? (c) Outline the major steps involved in the application

What do you meant by equilibrium national income, Question 1: a) What ...

Question 1: a) What do you meant by equilibrium National Income and to what extent is economic growth beneficial to an economy? b) Explain using both diagrams and mathemat

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?

Expected Experience Ratio, How do Insurance companies calculate the Expecte...

How do Insurance companies calculate the Expected Experience Ratio

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