The marketing manager has estimated the company’s demand curve with the equation P=3000 – 40Q. To develop a deeper understanding of pricing and quantity to be produced, complete the following analyses:
1. Draw the demand curve (use a range of Q values from 20 to 60).
2. Calculate revenue variation with quantity and determine the price that maximizes revenue.
3. Calculate price elasticity of demand. At what quantity the demand is unit-elastic? Identify the elastic and inelastic range for demand.
4. What price and quantity would you recommend to your CEO?