A small business assumes that the demand function for one of its new products can be modeled by p = Cekx. When p = $50, x = 1000 units, and when p = $40, x = 1200 units. Solve for C and k. (Round C to four decimal places and k to seven decimal places.)

A small business assumes that the demand function for one of its new products can be modeled by p = Cekx. When p = $50, x = 1000 units, and when p = $40, x = 1200 units. Solve for C and k. (Round C to four decimal places and k to seven decimal places.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 2E: The price elasticity of demand for air travel differs radically from first-class (1.3) to...

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Question

A small business assumes that the demand function for one of its new products can be modeled by

p = Ce^kx.

When p = $50, x = 1000 units, and when p = $40, x = 1200 units.

Solve for C and k. (Round C to four decimal places and k to seven decimal places.)

Find the values of x and p that will maximize the revenue for this product. (Round x to the nearest integer and p to two decimal places.)

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