Question

The market research department of the Better Baby Buggy Co. predicts that the demand equation for its buggies is given by q = −0.5p + 150 where q is the number of buggies it can sell in a month if the price is $p per buggy. At what price should it sell the buggies to get the largest revenue?

Answer 1

Answer:

Price=150

Explanation:

Total revenue (TR) is given by $Price \times Quantity$. We can get the quantity from the demand equation. Then

$TR= (150-0.5p)\times p=150p-0.5p^2$

where p is the price. To find the maximum revenue we take derivatives with respect to the price and equalize it to zero

$\frac{d}{dp}TR=150-p=0$

solving for p we have that p=150