Question

Part 1 Directions:

List the number of sales (Y) at the stated price point (x). Find a demand function D(x) which outputs Y when you input x. This function should be decreasing (negative derivative).

Y= 1000

X= $20

For D(x) I got D(x) = 20100-5x.

If you find a is a better Y and X please use it, this is just what I chose to use.

(Professors notes: A quick way to make a demand function for your product:

1. Record your number of current sales, S (units sold, not revenue), and current price, P.

2. Let B be the number of sales (units sold) you expect to lose for every dollar you raise your price

3. Let A = S + B · P

4. Your demand function is D(x) = A − Bx)

Part 2 Directions:

Find D’(x), and use it to find the elasticity function E(x). Just like in the elasticity unit, set E(x) = 1 and solve for x to find the “optimal” price point.

I kind of have the first part but need help with part 2. Thank you!

Answer 1

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