A general exponential demand function has the form q = Ae^−bp (A and b nonzero constants).
(a) Obtain a formula for the price elasticity E of demand at a unit price of p.
E =
(b) Obtain a formula for the price p that maximizes revenue.
p =
This is the last problem I need. Any help would be appreciated.
(a) Obtain a formula for the price elasticity E of demand at a unit price of p.
E =
(b) Obtain a formula for the price p that maximizes revenue.
p =
This is the last problem I need. Any help would be appreciated.
-
It's just a formula.
E = (p/q)(dq/dp)
dq/dp = -bAe^(−bp)
(p/q)(dq/dp) = [p/Ae^(−bp)] (-bAe^(−bp))
= -pb
E = (p/q)(dq/dp)
dq/dp = -bAe^(−bp)
(p/q)(dq/dp) = [p/Ae^(−bp)] (-bAe^(−bp))
= -pb