Question: 4. Compare a linear demand function of the type p = a-bq with another demand function of the type p = a/q and discuss: (4a)

4. Compare a linear demand function of the type p = a-bq with another demand function of the type p = a/q and discuss:

(4a) the important differences (e.g., how much the consumers will spend when the expenditure increases or decreases etc.) between the two types of demand functions.

(4b) Suppose for a given market demand, profit is maximized at a price of $4 per unit. Is the revenue maximizing price higher, lower or equal to the profit-maximizing price of $4 per unit? Explain why? Under what conditions both prices could be the same?

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