Answer: See Explanation
Step-by-step explanation:
The price elasticity of demand will be calculated as:
q = 860 − 20p.
dq/do = -20
p = 38
Elasticity E(p) = (p/q) × dq/dp
= [38 /(860 - 20p)] × (20)
=38 × 20/(860 - 760)
= 7.6
Therefore, the price elasticity of demand when the price is $38 per orange is 7.6
Revenue = price × quantity
= p × q
= p × (860 − 20p)
= 860p - 20p²
Differentiating with respect to p
= 860 - 40p
40p = 860
p = 860/40
p = 21.50
Maximum Revenue = 860p - 20p²
= 860(21.50) - 20(21.50)²
= 18490 - 9245
= 9245
