Currently, the demand equation for baseball bats is Q = 100 - 2P. The current price is $15 per bat. Is this the best price to charge in order to maximize revenues?
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We want to begin by finding the total revenue (TR) function for a firm producing baseball bats. Recall that :
TR=T×Q
We can substitute the demand equation in for Q to find:
TR= T×(100-2p)
= 100 p -2p^2
From calculus, we know that a function is maximized (or minimized) when its derivative is set equal to zero. We take the derivative of TR with respect to price, set this equal to zero, and solve for P.
TR=T×Q
We can substitute the demand equation in for Q to find:
TR= T×(100-2p)
= 100 p -2p^2
From calculus, we know that a function is maximized (or minimized) when its derivative is set equal to zero. We take the derivative of TR with respect to price, set this equal to zero, and solve for P.
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