The consumer demand equation for tissues is given by q = (91 p)2, where p is the

ID: 1217470 • Letter: T

Question

The consumer demand equation for tissues is given by q = (91 p)2, where p is the price per case of tissues and q is the demand in weekly sales.

(a) Determine the price elasticity of demand E when the price is set at $34. (Round your answer to three decimal places.)

E = ?

The demand is going down by___?___ % per 1% increase in price at that price level.

(b) At what price should tissues be sold in order to maximize the revenue? (Round your answer to the nearest cent.)

$ _______?

(c) Approximately how many cases of tissues would be demanded at that price? (Round your answer to the nearest whole number.)

_______cases per week

a) The demand function is Q = 182 - 2P

At P = $ 34 , the quantity demanded = 114

The Price elasticity of demand ep = dq/dp ( P/q)

dq/dp = -2

Q = 182 - 2P

dq/dp= -2

ep = -2 X ( 34/114)

ep = -0.596 .

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b) Revenue = Price X quantity demanded

R = P( 182 - 2P)

R = 182P - 2P2

dR/dP = 182 - 4P --- ( 1)

d2 R/dp2 = -4

Put equation 1 to zero

182 - 4P = 0

4P = 182

P = $ 45.50 ( price should tissues be sold in order to maximize the revenue)

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C) Q = 182 - 4P

Q = 182 - 4 X $ 45.50

Q = 0 ( The quantity demanded at that price is 0)

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