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

Quantitative methods, a rural population (given in thousands) is thought to...

a rural population (given in thousands) is thought to decline according to the equation p=15e^(-0.1t). if t=0 at the beginning of 1998. calculate the numbers in the population at t

Remedies for overtrading, Remedies for overtrading Short-term solutions...

Remedies for overtrading Short-term solutions • Speeding up collection from customers. • Slowing down payment to suppliers. • Maintaining lower inventory levels. Lo

standard deviation of a portfolio and probability, Question What is th...

Question What is the standard deviation of a portfolio which is comprised of $4,500 invested in stock S and $3,000 in stock T?

What do you meant by overtrading, Q. What do you meant by Overtrading? ...

Q. What do you meant by Overtrading? When a company is trading large volumes of sales very quickly, it may also be generating large amounts of credit sales and consequently lar

Discuss the major risks in project, Determine whether the proposed investme...

Determine whether the proposed investment in Gujistan satisfies the investment criteria set by PASE plc. Also discuss the limitations of the criteria in the context of this project

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

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

How do Insurance companies calculate the Expected Experience Ratio

Operating cycle, what is the applicability of an operating cycle in vegetab...

what is the applicability of an operating cycle in vegetable growing?

Conservative policy for financing working capital, Q. Conservative policy f...

Q. Conservative policy for financing working capital? A conservative policy for financing working capital is one where short-term finance is usedto fund: A : All of the flu

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

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