Last year OHaganBooks.com experimented with an online subscriber service, Red On Line (ROL), for its e-book service. The consumer demand for ROL was modeled by the equation q = 900e−p2 + p, where p was the monthly access charge and q is the number of subscribers. (a)Obtain a formula for the price elasticity of demand, E, for ROL services. E(p) = _____ (b)Compute the elasticity of demand if the monthly access charge is set at $2 per month. E(2) = _____ (c)How much (in dollars) should the company have charged to obtain the maximum monthly revenue? $ _____ How much (in dollars) would this revenue have been? $ ______
Last year OHaganBooks.com experimented with an online subscriber service, Red On Line (ROL), for its e-book service. The consumer demand for ROL was modeled by the equation q = 900e−p2 + p, where p was the monthly access charge and q is the number of subscribers. (a)Obtain a formula for the price elasticity of demand, E, for ROL services. E(p) = _____ (b)Compute the elasticity of demand if the monthly access charge is set at $2 per month. E(2) = _____ (c)How much (in dollars) should the company have charged to obtain the maximum monthly revenue? $ _____ How much (in dollars) would this revenue have been? $ ______
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Last year OHaganBooks.com experimented with an online subscriber service, Red On Line (ROL), for its e-book service. The consumer demand for ROL was modeled by the equation
q = 900e−p2 + p,
where p was the monthly access charge and q is the number of subscribers.
(a)Obtain a formula for the price elasticity of demand, E, for ROL services.
E(p) = _____
(b)Compute the elasticity of demand if the monthly access charge is set at $2 per month.
E(2) = _____
(c)How much (in dollars) should the company have charged to obtain the maximum monthly revenue?
$ _____
How much (in dollars) would this revenue have been?
$ ______
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