What price must edi charge in order to maximize its revenue

Reference no: EM133256202

Assignment:

In Moab, Utah there are 400 people and all of them have the same demand curve for the energy drink Red Bull: P = 16 - 4Q, where P is the price of Red Bull in $/can and Q is the quantity of cans per year of Red Bull. All of Moab's Red Bull is supplied by a single wholesale distributer, Energy Drinks International (EDI).

a) Derive the market demand curve for Red Bull in Moab.

b) Suppose that EDI charges $2 per can of Red Bull. What is the market demand at this price? How many cans will each person buy? How much revenue will EDI earn?

c) What price must EDI charge in order to maximize its revenue? How do you know?

Reference no: EM133256202

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