Determining revenue maximizing price
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You are the manager of the Chevrolet Motor Division of GMC. Your Marketing department estimates that the semi-annual demand for the Chevy Tahoe is Q=100,000-1.25 P. What price do you recommend that GM charge for its Tahoe if its desire is to maximize sales? Draw a graph that illustrates your recommendation.
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Solution Summary
Solution describes the steps to determine the price at which total revenue is maximized.
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Please refer attached file for graph.
Q=100000-1.25P
1.25P=100000-Q
P=80000-0.8Q
Total Revenue, TR=P*Q=(80000-0.8Q)*Q=80000Q-0.8Q^2
Marginal Revenue=MR=d(TR)/dQ=80000-1.6Q
For Revenue maximization, Put ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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