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Exercises · Q11

Q.A firm's revenue function is R(x)=100x−2x2R(x) = 100x - 2x^2.

(i) Find the output level at which revenue is maximised, and the maximum revenue.
(ii) Find the two output levels at which revenue is zero.
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  1. Output at maximum revenue. R(x)=−2x2+100xR(x) = -2x^2+100x has a=−2a=-2, b=100b=100. Since a<0a<0, the parabola opens downward and has a maximum at

    x=−b2a=−1002(−2)=−100−4=25x = -\frac{b}{2a} = -\frac{100}{2(-2)} = -\frac{100}{-4} = 25

    Maximum revenue:

    R(25)=100(25)−2(25)2=2500−2(625)=2500−1250=₹1,250R(25) = 100(25) - 2(25)^2 = 2500 - 2(625) = 2500-1250 = ₹1{,}250

  2. Output levels at which revenue is zero. 100x−2x2=0 ⇒ 2x(50−x)=0 ⇒ x=0 or x=50100x - 2x^2 = 0 \ \Rightarrow \ 2x(50-x) = 0 \ \Rightarrow \ x=0 \ \text{or} \ x=50 …

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