Find Total Revenue Function From Demand Function

The higher the price the less the demand.

Find total revenue function from demand function. In its simplest form the demand function is a straight line. Stack exchange network consists of 176 q a communities including stack overflow the largest most trusted online community for developers to learn share their knowledge and build their careers. Demand revenue cost profit demand function d q p d q in this function the input is q and output p q independent variable p dependent variable recall y f x p d q the price at which q units of the good can be sold unit price p most demand functions quadratic project 1 demand curve which is the graph of d q is generally downward sloping why. This means differentiate the cost revenue or profit.

Economists and manufacturers study demand functions to see the effects of different prices on the demand for a product or service. C 40 000 0 3 q where c is the total cost. In this video we maximize the revenue from a linear demand function by. Profit income cost.

In symbols π r c p q f v q. To calculate it you need at least two data pairs that show how many units are bought at a particular price. Then calculate f 4249 f 4250 and f 4251. Cost function c x total cost of producing the units.

Marginal cost marginal revenue and marginal profit all involve how much a function goes up or down as you go over 1 to the right this is very similar to the way linear approximation works. Profit function p x total income minus total cost. Say that you have a cost function that gives you the total cost c x of producing x items shown in the figure below. π r c 1 2 q.

To calculate total revenue we start by solving the demand curve for price rather than quantity this formulation is referred to as the inverse demand curve and then plugging that into the total revenue formula as done in this example. Solution or modeling the revenue function notice that the demand depends on the price of the product. However if the price is 70 dollars the demand is 5000. Marginal revenue r x the derivative of r x.

What is your observation. In this video we maximize the revenue from a linear demand function by finding the vertex of a quadratic function. The equation for the cost function is. P x r x c x marginal is rate of change of cost revenue or profit with the respect to the number of units.