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5. The Zenith television company faces a demand function for its products which can be expressed as Q-4000 - P+0.5Y where Q is the number of televisions, P is the price per television, and is average monthly income. Average monthly income is currently equal to RM2,000 1. Express the inverse demand curve faced by Zenith at the current income level. [2 marks) At what price and quantity is Zenith's total revenue (TR) maximum? State the maximum TR value. Show the value of marginal revenue at this price and quantity. (4 marks) C. What is the price elasticity of demand for Zenith's demand function at the price and quantity derived in (b)? Interpret. (3 marks) Why might Zenith choose to produce at a price and quantity different that that derived in (b)? (3 marks) d.

Answer 1

P=250 only maximigahon. Zenith poopit maximizahon 6QS 8 - 4000-P+0.54 4) A is not necconly bor Zenith to y = 2000 choose the =250 = 4000 - P+ 1000 because bere there 8 = 500-P total levenue 1) Enveese demand would want but here cost is not 2) TR= PQ (500-99 - 5009-9 to maximize TR put dIRED dg d TR = 500 - 28. do 8 - 500 = 250 P = 500-8 given. 2 g=250 u eq 0 Put P- 500- 250 250 TR = = (250)(2 sp) 62500 MR = 500 - 29 at 8=250 MR = 0 3) Price elasticity=de.p dp 8 from 0 de de 250 250 -1 with eu penent increase price quantity demanded deerad by 1 perent.