The Relationship D = 5000 − 25p Describes What Happens

question 50

Essay

The relationship d = 5000 − 25p describes what happens to demand (d)as price (p)varies.Here,price can vary between $10 and $50.
a.How many units can be sold at the $10 price? How many can be sold at the $50 price?
b.Model the expression for total revenue.
c.Consider prices of $20,$30,and $40.Which of these three price alternatives will maximize total revenue? What are the values for demand and revenue at this price?

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with fixed dividend payments.

Common Equity

The amount of money that would be returned to shareholders if all the assets were liquidated and all the company's debt was paid off.

Pre-Tax Basis

An evaluation or measure made before taxes are deducted.

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit.