T-Shirts The Physics Club sells E = mc^{2}. T-shirts at the

deliriwmfg

deliriwmfg

Answered question

2021-11-17

T-Shirts The Physics Club sells E=mc2.
T-shirts at the local flea market. Unfortunately, the club’s previous
administration has been losing money for years, so you decide to do an
analysis of the sales. A quadratic
regression based on old sales data reveals the following demand equation for the T-shirts:
q=2p+33p(9p15)2
 Here, p is the price the club charges per T-shirt and q is the
number it can sell each day at the flea market. a. Obtain a formula for
the price elasticity of demand for E=mc2 T-shirts. b. Compute the
elasticity of demand if the price is set at $10 per shirt. Interpret the
result. c. How much should the Physics Club charge for the T-shirts to
obtain the maximum daily revenue? What will this revenue be?"

Answer & Explanation

Walker Funk

Walker Funk

Beginner2021-11-18Added 13 answers

Step 1
The price elasticity of demand E at a given point (p1; q1) is defined as
E=p1q1dqdp(p1)
and is supported to measure the possible responcse of tissues demand due to
small changes in its price when the price is at p1
A quadratic regression based on old sales data reveals the following demand
equation for the T-shirts: q=2p+33p(9p15)2Here, pis the price the
club charges per T-shirt and q is the number it can sell each day at
the flea market.
(a) Obtain a formula for the price elasticity of demand for E=mc2 T-shirts.
Since
dqdp=4p+30,(9<p<15)
E=p1q1dqdp(p1)=p1q1(4p1+30)
where 9<p1<15
(b) Compute the elasticity of demand if the price is set at $9 per shirt
(Round your answer to two decimal places.)Interpret the result.
When the price is set at $9 the demand is
q=2(9)2+30(9)=108
t-shirts
(p1, q1)=(9,108)p1q19108=0.0833
Also,we have
dqdp=4p+30dqdp(9)=49+306
hence E=p1q1dpdq(p1)=0.0833(6)=0.50
That would mean the demand would go down about 0.5% per 1% increase in price at that price level.
Step 3
(c) How much should the Physics Club charge for the T-shirts are sold.
The daily revenue is Tq so Tq is maximum when q is maximum.
sinse
dpdq=4p+30
there is acritical point when4p+30=0
and(304)=$7.5
given that the second derivative of q with respect to p equals 4<0, that point is a maximum.
At that price,the demand would be
q=2(7.5)2+30=86.2586T  shirts.

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