Suppose the demand for a product X produced by a company AAA is given by the following function: QX = 2000 - 250*PX. At what price per item of the product X (EUR) can this copmany maximize its total revenues? Fill in the Table gaps: Demand function Price function Total Revenue (EUR) Marginal Revenue (EUR) Quantity Price per product (EUR) Q = 2000 - 250P P = ? TR = Q*P MR = dTR/dQ = 0 Q = ? P = (2000 - Q)/250 250P = 2000 - Q TR = Q*(2000 - Q)/250 MR = 8 - 2*Q/250 Q/125 = 8 P = (2000 - 1000)/250 P = (2000 - Q)/250 TR = 8*Q - Q^2/250 8 - Q/125 = 0 Q = 1000 P = 4 Alternative solution Demand function Total Revenue (EUR) Marginal

Suppose the demand for a product X produced by a company AAA is given by the following function: QX = 2000 - 250PX. At what price per item of the product X (EUR) can this copmany maximize its total revenues? Fill in the Table gaps: Demand function Price function Total Revenue (EUR) Marginal Revenue (EUR) Quantity Price per product (EUR) Q = 2000 - 250P P = ? TR = QP MR = dTR/dQ = 0 Q = ? P = (2000 - Q)/250 250P = 2000 - Q TR = Q(2000 - Q)/250 MR = 8 - 2Q/250 Q/125 = 8 P = (2000 - 1000)/250 P = (2000 - Q)/250 TR = 8*Q - Q^2/250 8 - Q/125 = 0 Q = 1000 P = 4 Alternative solution Demand function Total Revenue (EUR) Marginal

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.7P

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Demand function	Price function	Total Revenue (EUR)	Marginal Revenue (EUR)	Quantity	Price per product (EUR)
Q = 2000 - 250P	P = ?	TR = Q*P	MR = dTR/dQ = 0	Q = ?	P = (2000 - Q)/250
	250P = 2000 - Q	TR = Q*(2000 - Q)/250	MR = 8 - 2*Q/250	Q/125 = 8	P = (2000 - 1000)/250
	P = (2000 - Q)/250	TR = 8*Q - Q^2/250	8 - Q/125 = 0	Q = 1000	P = 4


Alternative solution	Demand function	Total Revenue (EUR)	Marginal Revenue (EUR)	Price per product (EUR)
	Q = 2000 - 250P	TR = Q*P	MR = dTR/dP = 0	2000 - 500*P = 0
		TR = (2000 - 250P)*P	MR = 2000 - 2250P	500*P = 2000
		TR = 2000P - 250P^2	MR = 2000 - 500*P	P = 4