Question

Worldwide annual sales of smartphones in over a 5 year period were projected to be approximately

q = −10p + 4,500

million phones at a selling price of $p per phone.

(a)

Obtain a formula for the price elasticity of demand E.

(b)

In one particular year the actual selling price was $275 per phone. What was the corresponding price elasticity of demand? Interpret your answer.

(c)

Use your formula for E to determine the selling price that would have resulted in the largest annual revenue. What, to the nearest $10 million, would have been the resulting annual revenue?

2.The consumer demand curve for Professor Stefan Schwarzenegger's dumbbells is given by

q = (101 − 2p)²,

where p is the price per dumbbell, and q is the demand in weekly sales. Find the price Professor Schwarzenegger should charge for his dumbbells to maximize revenue. (Round your answer to the nearest cent.)

Answer 1