The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 105eP - 3p/2, where q is the demand in monthly sales and p is the retail price in hundreds of yen.(a) Determine the price elasticity of demand E when the retail price is set at ¥300.E = 24Interpret your answer.The demand is going down vby 24% per 1% increase in price at that price level. Thus, a large price decrease vis advised.(b) At what price will revenue be a maximum? (Round your answer to the nearest integer.)yen(c) Approximately how many paint-by-number sets willI be sold per month at the price in part (b)? (Round your answer to the nearest integer.)paint-by-number sets per month

We are going to use maximisation technique to answer this question.

The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 105eP - 3p*/2, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a) Determine the price elasticity of demand E when the retail price is set at ¥300. E = 24 Interpret your answer. The demand is going down v v by 24 v % per 1% increase in price at that price level. Thus, a large price decrease • v is advised. (b) At what price will revenue be a maximum? (Round your answer to the nearest integer.) yen (c) Approximately how many paint-by-number sets will be sold per month at the price in part (b)? (Round your answer to the nearest integer.) paint-by-number sets per month

The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 105eP - 3p*/2, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a) Determine the price elasticity of demand E when the retail price is set at ¥300. E = 24 Interpret your answer. The demand is going down v v by 24 v % per 1% increase in price at that price level. Thus, a large price decrease • v is advised. (b) At what price will revenue be a maximum? (Round your answer to the nearest integer.) yen (c) Approximately how many paint-by-number sets will be sold per month at the price in part (b)? (Round your answer to the nearest integer.) paint-by-number sets per month

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

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 6E

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The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 95e−3p2 + p, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a) Determine the price elasticity of demand E when the retail price is set at ¥400. E = _____ Interpret your answer. The demand is going down/up by ____ % per 1% increase in price at that price level. Thus, a large price decrease/increase is advised. (b) At what price will revenue be a maximum? ____ hundred yen (c) Approximately how many paint-by-number sets will be sold per month at the price in part (b)? (Round your answer to the nearest integer.) ______ paint-by-number sets per month
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