A firm faces a demand function D(p), for which the revenue-maximizing price is $16.The demand function is altered to 2D(p).What is the new revenue-maximizing price?
A)$8
B)$16
C)$32
D)There is insufficient information to determine this.
E)none of the above.

Question

Quizplus · Accepted Answer

Revenue-maximizing price depends only on the demand function, not on the units of measurement. Since the demand function is simply multiplied by 2 and the original revenue-maximizing price is $16, the new revenue-maximizing price is 2*$16=$32.

A Firm Faces a Demand Function D(p), for Which the Revenue-Maximizing