For these problems, please write up your solutions on a separate sheet of paper,
ID: 1213760 • Letter: F
Question
For these problems, please write up your solutions on a separate sheet of paper, showing all work and reasoning. Also, include complete sentence answers (with correct units!) for any word problems. A company that produces flip-phones has this price-demand function: p = 74.6 A " 3q for 1 lessthanorequalto q lessthanorequalto 10 million phones. What is the level of demand if the price is set at S60 per phone? Write down the equation of the revenue function. Find the value of q that generates maximum revenue. What is the wholesale price per camera that generates maximum revenue? What will the marginal revenue be if two million phones are sold?Explanation / Answer
1) a) Level of demand :-
P = 60$
=> 60 = 74.6 - 3q
=> q = 4.86 = 5 flip phones
b) R(q) = p*q ------------------> where R is revenue
So, R(q) = (74.6 - 3q)q
=> R(q) = 74.6q -3q2
c) We need to R'(q) to maximize revenue
=> R'(q) = 74.6 - 6q
For maximizing revenue R'(q) = 0
=> 0 = 74.6 - 6q
=> q = 12.43 = 12 flip phones
d) Putting 12.43 from (c) in the equatin p =74.6 -3q
So, wholesale price => p = 74.6 - 3*12.43
=> p = 37.31 $ per camera
e) MR = change in TR/ change in Quantity ------> MR= Marginal Revenue, TR = Total Revenue
MR = (p2q2- p1q1)/(q2-q1)