Optimization Of Business Models Help: Demand & Revenue

label Calculus
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

Apr 17th, 2015

slope of demand function = change in sales/change in rebate 
= 270/10 
= 27

When rebate = 0, demand = 1000. 
∴ p(x) = 27x +1400 
----------------- 
Revenue = demand * (price - rebate) 
= (27r + 1400)(480 - r) 
= (27r + 1400)(-r + 480) 
= -27r² + 11560r + 672,000 

Revenue' = -54r + 11560 
54r = 11560
r = 214.1

Revenue is maximized when rebate = $214
---------------------- 

Apr 17th, 2015

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Apr 17th, 2015

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