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- This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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- February 19, 2017 at 8:37 am #373105
i asked you a question yesterday i can’t reply to that question because its close now. any ways i want to know how that ‘0.001Q’ come? and from where do you get ‘Q= 220000’
here is your reply that you replied there.
You do not need the marginal cost because the question does not ask for the maximum profit – it asks for the maximum revenue.
“Total sales revenue per period be maximised” means they want to know what selling price will give the maximum sales revenue.
The maximum sales revenue occurs when the marginal revenue is equal to zero.
The marginal revenue (using the formula from the formula sheet) is a – 2bQ, which in this question is equal to 220 – 0.001Q
This equals zero when Q = 220000If you put q + 220,000 in the price demand equation then P = 220 – 0.0005×220,000 = 110
February 19, 2017 at 3:47 pm #373161You had already written that b in the price demand equation was 0.0005 and that a was 220.
The equation for the marginal revenue (from the formula sheet) is a – 2bQ2b = 2 x 0.0005 = 0.001.
So the MR = 220 – 0.001Q
For maximum revenue, MR = 220 – 0.001Q = 0
Adding 0.001Q to both sides gives: 220 = 0.001Q
Dividing both sides by 0.001 gives q = 220/0.001 = 220,000
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