Stats Solutions

[Steps Shown] Suppose your firm faces a demand curve as follows: Q d x = 100 - 0.3P X + 0.6P Y + 0.03M where M is per capita income currently estimated

Question: Suppose your firm faces a demand curve as follows: Q d x = 100 – 0.3P X + 0.6P Y + 0.03M where M is per capita income currently estimated at $22,000. P Y is $400. At what price would your firm maximize its total revenues and what would that revenue be at that point? (Hint: Simplify the demand function by inserting the given values of P Y and M. Then think about where TR is maximized. Remember that for this particular linear demand function, α x = -0.3. Find price and TR.

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