The Equation For Price P ( D ) Essay - 1308 Words

The equation for revenue, R(d), is the product of the equation for price p(d) of a product and the demand (d) (pblpathways.com). R(d)=p(d) Ãâ€"d R(d)=((-1.67Ãâ€"ã€â€"10ã€â€"^(-5))d+597.88) d R(d)= (-1.67Ãâ€"ã€â€"10ã€â€"^(-5))d^2+597.88d The equation for this function is parabolic because at some point the price to manufacture the quantity of iPads demanded would rise at a faster rate than the profit earned by each sale so the revenue would begin to shrink (pblpathways.com). The derivative of the revenue equation is known as the marginal revenue (MR) and it represents the change in revenue by increasing the sales of a product (pblpathways.com). Marginal cost (MC) is the additional cost added to increase the quantity of a product (pblpathways.com). Ideally, the marginal cost and the marginal revenue will add to a difference of zero because a company wants to maximize the amount of products they sale to maximize the revenue without adding an outstanding additional cost to produce this product. MR+MC=0 MR= -MC MR= d/(dx ) (R(d)) MR= d/dx((-1.67Ãâ€" ã€â€"10ã€â€"^(-5) ) d^2+597.88d)=(-3.34Ãâ€"ã€â€"10ã€â€"^(-5) )d+597.88 MR= (-3.34Ãâ€"ã€â€"10ã€â€"^(-5) )d+597.88 MC=(3.34Ãâ€"ã€â€"10ã€â€"^(-5) )d-597.88 Scaled* I have graphed the equations for the marginal revenue and marginal cost and added them to the graph for the revenue of the Apple iPad. The point at which marginal revenue and marginal cost intersect is known as the point at which profits are maximized (pblpathways.com). The point of intersection is aligned with theShow MoreRelatedBinomial Model : Black Scholes1630 Words   |  7 Pagesto gain an equation for the error controlled prices. 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