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2. We can leverage this model to tell the company even more information. Of course the company is interested in demand, but what they are
2. We can leverage this model to tell the company even more information. Of course the company is interested in demand, but what they are really interested in is revenue. How much money they will be bringing in. If they lower the selling price, they might get more demand but they bring in less money per shirt. They need to know how this will affect their revenue. Revenue = price x demand or R(p) = p x q Using your demand function from question (1), you can create a revenue function. This function accepts as input a selling price and outputs the revenue the company will make by selling shirts at that price. a. Give the formula for the revenue function for this company. b. Sketch a graph of the revenue function on the axes to the right. c. Over what interval(s) is the revenue increasing? d. At what price(s) is the revenue zero? e. What is the maximum revenue that the company can earn? f. What price should the company charge to obtain the maximum revenue
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