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Jim's Camera shop sells two high-end cameras, the Sky Eagle and Horizon. The demands for these two cameras are as follows: DS = demand for the Sky Eagle, PS is the selling price of the Sky Eagle, DH is the demand for the Horizon, and PH is the selling price of the Horizon.
DS = 229 − 0.60PS + 0.35PH
DH = 269 + 0.10PS − 0.64PH
The store wishes to determine the selling price that maximizes revenue for these two products. Develop the revenue function for these two models. (Enter your answer in terms of
PS and PH.)
revenue =

Respuesta :

The revenue is given by the product of the price and the demand function

  • The revenue function for Sky Eagle is RS = 229·PS - 0.60·PS² + 0.35·PS·PH.
  • The revenue function for Horizon is RH = 269·PH + 0.10·PS·PH - 0.64·PH².

Reasons:

The given parameters are;

The demand function for the Sky Eagle, DS = 229 - 0.60·PS + 0.35·PH

The demand function for the Horizon, DH = 269 + 0.10·PS - 0.64·PH

The above demand functions gives the quantity demanded

Therefore, the revenue function is given by the product of the price and the demand function as follows;

RS = PS × DS = PS × (229 - 0.60·PS + 0.35·PH) = 229·PS - 0.60·PS² + 0.35·PS·PH

The revenue for Sky Eagle RS = 229·PS - 0.60·PS² + 0.35·PS·PH

Revenue for Horizon is found as follows;

RH = PH ×(269 + 0.10·PS - 0.64·PH) = 269·PH + 0.10·PS·PH - 0.64·PH²

The revenue for Horizon, RH =  269·PH + 0.10·PS·PH - 0.64·PH²

Learn more demand function here:

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