New Port Beach Business Daily

What are the total revenue and price elasticity at this point?

Always Round Tire finds that their demand curve is: P = 50 - .02 Q. What price and quantity will maximize revenue? What are the total revenue and price elasticity at this point?

Public Comments

1. 1. multiply the demand curve by Q to get TR=P*Q= ....*Q 2. find Q such that dTR/dQ = 0. (This is the Q to max rev) 3. Use Q from #2 to find P. Then, invert the demand curve and find dQ/dP. 4. Finally, plug in P & Q in the def of PED [(dQ/dP)*(P/Q)] to get the price elasticity at the rev maximizing P & Q.