Suppose the demand function is of the form q = Cp -k , where C and k
Question:
Suppose the demand function is of the form q = Cp-k, where C and k are positive constants.
Find the elasticity E.
If 0
If k > 1, what does your answer from part (a) say about how prices should be set to maximize the revenue?
If k = 1, what does your answer from part (a) tell you about setting prices to maximize revenue?
Based on your answers above, is a demand function of the
form q = Cp-k realistic? Explain your answer.
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