Question

The demand equation for a product is q=600 - 50p+p? If the price of $14 is increased by %, find the corresponding percentage change in revenue. 3 If the price of $14 is increased by the approximate change in revenue is %. (Do not round until the final answer. Then round to two decimal places as needed.)

Answer 1

Answer:

-3.34%    (that is, Revenue falls by 3.34%)

reason:

Quantity when price= $14:
q = 600 - 50p + p^2 = 600 - (50*14) + (14)^2 = 96

Quantity when price increases by 3/2% ($14.21):
q = 600 - (50*14.21) + (14.21)^2 = 91.42

Revenue = price*quantity.
When price= $14, revenue = 14*96 = 1344
When price= $14.21, revenue = 14.21 * 91.42 = 1299.08

Percentage change in revenue = (Initial Revenue - Changed revenue)/ initial revenue) *100
= [(1299.08 - 1344)/ 1344] * 100 = -3.34%
Revenue falls by 3.34%