11. For most products, higher prices result in a decreased demand, whereas lower prices result
in an increased demand. Let
1
d = annual demand for a product in units
p = price per unit
Assume that a firm accepts the following price-demand relationship as being realistic:
d = 800 – 10p
where p must be between $20 and $70.
How many units can the firm sell at the $20 per-unit price? At the $70 per-unit price?
b. Show the mathematical model for the total revenue (TR), which is the annual demand
multiplied by the unit price.
Answers
Step-by-step explanation:
or most products, higher prices result in a decreased demand, whereas lower prices result in an increased demand. Let
d = annual demand for a product in units
p = price per unit
Assume that a firm accepts the following price-demand relationship as being realistic:
d = 800 - 10p
where p must be between $20 and $70.
How many units can the firm sell at the $20 per-unit price? Round your answer to the nearest whole number.
d = units
At the $70 per-unit price? Round your answer to the nearest whole number.
d = units
What happens to annual units demanded for the product if the fim increases the per unit price from $26 to $27?
If the firm increases the per unit price from $26 to $27, the number of units the firm can sell __by__ .
From $42 to $43?
If the firm increases the per unit price from $42 to $43, the number of units the firm can sell __ by__ .
What is the suggested relationship between the per-unit price and annual demand for the product in units?
This suggests that the relationship between the per-unit price and annual demand for the product in units is __ between $20 and $70 and that annual demand for the product __ by __ units when the price is increased by $1.
Show the mathematical model for the total revenue (TR), which is the annual demand multiplied by the unit price. Express your answer in terms of p.
TR = __
Based on other considerations, the firm’s management will only consider price alternatives of $30, $40, and $50. Use your model from part (c) to determine the price alternative that will maximize the total revenue.
Total revenue is maximized at the $ __ price.
What are the expected annual demand and the total revenue corresponding to your recommended price?
Round your answer to the nearest whole number.
d = ____units
Round your answer to the nearest dollar.
TR = _______$