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A firm's total revenue (TR) is provided by pq, where p is price and q is quantity sold. Assume the firm is initially selling 1000 units of its product at a price of 100 euros. Then it enhances the price by 10% which results in a decreases of 5% in quantity sold.
(a) Use the total differential of the TR function to approximate the alter in total revenue.
(b) What percentage error results from using the differential compared with the true solution?
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