The weekly sales of Honolulu Red Oranges is given by -912-20p. where q is the nu
ID: 2889446 • Letter: T
Question
The weekly sales of Honolulu Red Oranges is given by -912-20p. where q is the number of oranges sold at the price p dollars per orange. Find E(P) E(p) = Calculate the price elasticity of demand when the price is $38 per orange (yes, $38 per oranget). HINT [see Example 1.] Interpret your answer The demand is going downby 96 per 1% increase in price at that price level Use the elasticity to calculate the price that gives a maximum weekly revenue. X dollars per orange Find this maximum revenue dollars of revenueExplanation / Answer
given q= 912-20p
dq/dp = 0 -20*1
=>dq/dp = -20
E(p)=(dq/dp)(p/q)
=>E(p)=(-20)(p/(912-20p))
=>E(p)=-(20p/(912-20p))
when p=38
E(38)=-(20*38/(912-20*38))
E(38)=-5
price elasticity of demand when price is $ 38 per orange is - 5
if abosolute value is needed, then use 5
the demand is going down by 5% per 1% increase in price at that price level
E(p)=-(20p/(912-20p))
for maximum revenue |E(p)| =1
=>(20p/(912-20p)) =1
=>20p =912 -20p
=>40p=912
=>p=912/40
=>p=22.8
22.8 dollars per orange
maximum revenue = 22.8*( 912-20*22.8)
maximum revenue = 10396.8
10396.8 dollars of revenue
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