Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 2, Problem 7Q
To determine
Examples of variables that move in the same direction, opposite direction and have no correlation.
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what does it mean to have a linear correlation? Give an example of one.
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A kids' organization sold 570 bars last year at $ 2.55 per candy bar. Research has suggested that for each $
0.25 price increase, they will sell 20 less candy bars. They want to know what price should they sell their
candy bars at to maximize their revenue.
Please help them out, showing your work neatly in the following steps. And please label the steps clearly
with the letters A through F
A) Define your variables. This means that for every letter you use to represent a value, you communicate
what it equals in words.
B) Find the linear equation that relates the price and the number sold.
C) Determine a function that represents the Revenue.
(Remember, Revenue = (Price)*(Number Sold)).
D) Graph your revenue function on your calculator or Desmos or something similar and on your paper,
labeling the axes and the maximum point.
E) Uusing your calculator or Desmos or something similar, use your graph to determine the price that
maximizes the revenue for the organization.
Do NOT use calculus…
Chapter 2 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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