Question

The estimated monthly sales of mona lisa paint-by-number sets is given by the formula q = 97e−3p2 + p, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a) determine the price elasticity of demand e when the retail price is set at ¥400. e = interpret your answer. the demand is going by % per 1% increase in price at that price level. thus, a large price is advised. (b) at what price will revenue be a maximum? hundred yen (c) approximately how many paint-by-number sets will be sold per month at the price in part (b)? (round your answer to the nearest integer.) 17 paint-by-number sets per month

Answer 1

Answer: A. E=(dq/dp)*(p/q) = (99e*p -6p^2 +p) / (99eâ’3p2 + p) = (198e -22) /( 99e -10) B. max: pq=99ep -3p^3 + p^2 . FOC: dqp/dp = 99e -9p^2 + 2p = 0. now solve this quad for p... C. plug the answer for p that solves 99e -9p^2 + 2p = 0 into q = 99eâ’3p2 + p.