posted by Erin on .
given the demand function Q=9-.5P how can you figure out the optimal price if the objective of the firm is to mazimize revenues?? PLEASE HELP
more a calclus question with an economics application. First, set the equation for total revenue TR. TR is simply price times quantity -- P*Q. Multiply your equation by P.
P*Q = 9P-.5P^2 = TR
Next, find the first derivitive wrt to P. TR' = 9-P. Find the P such that TR'=0. Obviously P=9. This is the revenue (not profit) maximizing price.