3. The demand for a product P is given by the function D(P) = e-3P+3¸ %3D (a) Calculate the marginal revenue as a function of price and the price that maximises revenue. Hint: Recall that def(=) = f'(x)ef(x). (b) Compute the linear approximation of the revenue function in the variable P around P = 1. (c) Compute D(5) – D(2). Is the sign of this quantity positive or negative? From an economist point of view, does this result make sense? Give reasons for your answer.

Algebra and Trigonometry (6th Edition)
6th Edition
ISBN:9780134463216
Author:Robert F. Blitzer
Publisher:Robert F. Blitzer
ChapterP: Prerequisites: Fundamental Concepts Of Algebra
Section: Chapter Questions
Problem 1MCCP: In Exercises 1-25, simplify the given expression or perform the indicated operation (and simplify,...
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3. The demand for a product P is given by the function
-3P+5
D(P) = e
(a) Calculate the marginal revenue as a function of price and the price that
maximises revenue. Hint: Recall that ef(=) = f'(x)ef(=).
dr
(b) Compute the linear approximation of the revenue function in the variable
P around P = 1.
(c) Compute D(5) – D(2). Is the sign of this quantity positive or negative?
From an economist point of view, does this result make sense? Give
reasons for your answer.
Transcribed Image Text:3. The demand for a product P is given by the function -3P+5 D(P) = e (a) Calculate the marginal revenue as a function of price and the price that maximises revenue. Hint: Recall that ef(=) = f'(x)ef(=). dr (b) Compute the linear approximation of the revenue function in the variable P around P = 1. (c) Compute D(5) – D(2). Is the sign of this quantity positive or negative? From an economist point of view, does this result make sense? Give reasons for your answer.
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