CMA Final · Strategic Cost Management · Business Application of Maxima and Minima
A Jaipur firm's demand is x = 1,000 - 5p, where p is the price in rupees. What price maximises total revenue?
Revenue is maximised at a price of Rs 100. Revenue equals 1000p - 5p², its derivative 1000 - 10p is zero at p = 100, and the negative second derivative confirms it is a maximum, giving 500 units sold.
- ARs 100Correct
- BRs 200
- CRs 50
- DRs 150
Explanation
x = 1000 - 5p, so revenue R = p(1000 - 5p) = 1000p - 5p². R' = 1000 - 10p = 0 gives p = 100. R'' = -10 is negative, confirming a maximum. Rs 200 is the price at which demand falls to zero.
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