The David Company's demand curve for the company's product is P = 2,000 - 20Q, where P = price and Q = the number sold per month.
a) Derive the marginal revenue curve for the firm.
b) At what output is the demand for the firm's product price elastic?
c) If the firm wants to maximize its dollar sale value, what price should it charge?
A) TR=PQ=2000Q-20Q2
The derived marginal revenue is 2000-40Q or dTR/dQ=2000-40Q
B) P=-20Q+2000=> a =-20.
(100-Q)/2>1
UNIT TWO ASSESSMENT.
4(100-Q)>2
100>2Q
Q=50
The demand for the firm’s product price is elastic when the quantity is 50.
C) TR=2000Q-20Q2
d (TR)/d (Q )=2000-40Q
But Q=50
Substituting in our equation we have;
P=2000-20(50)
P=1000.
The firm should charge $1000 to maximize its dollar sales volume.
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