The following is the demand curve for widgets
P=120 - 1.5Q
Total revenue= 120Q - 1.5Q^2
Marginal revenue = 120 - 3Q
1) At what level of output is total revenue maximized and what is the corresponding price?
2) what is the value of marginal revenue when the price is $90?
3) what is the point price elasticity when the price is $90?
1) At what level of output is total revenue maximized and what is the corresponding price?
the TR is maximum when the MR=0
120-3Q=0
3Q=120
Q=40
and
P=120-1.5*40=60
the price is $60 and the quantity is 40
2) what is the value of marginal revenue when the price is $90?
P=120-1.5Q
converting it to normal function
1.5Q=120-P
Q=80-(2/3)P
P=90
Q=80-(2/3)*90
Q=20
MR=120-3*20=60
the MR is $60
3) what is the point price elasticity when the price is $90?
the formula is:
the elasticity is -3.
The following is the demand curve for widgets P=120 - 1.5Q Total revenue= 120Q - 1.5Q^2...
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