Mathematics for Business and Economics 2017/18

Seminar 3 (October 26)

Exercise 1
Consider the demand function

Q(P) = −P3 + 3P2 + 16.

Find the interval, where it is decreasing. Consider economic restrictions.

Exercise 2
A company is producing only one product, whose demand function is

Q(P) = −P2 + 900,

where 0 ≤ P ≤ 30.
a) How should the company set the price P to maximize its total revenue?
b) Find the demand and the total revenue corresponding to the optimal price.
c) Sketch the graph of the demand function in QP-plane and show the optimal total
revenue.

Exercise 3
For a boat manufacturer, the total revenue is given by

TR(Q) = ln(Q + 1)20

and the total cost is given by

TC(Q) = 21 Q2 + 10,
where Q is the number of boats produced.
a) How many boats should the company produce to maximize its profit?
b) Find the corresponding profit.