00:01
So in this question, we're given a price demand function.
00:03
P is 40 minus 5x for x between 0 and 8.
00:08
So first of all, we want the priced elasticity of demand when x equals 4.
00:13
So the elasticity is dp by dx times x over p, which is x over 40 minus 5x times dp by dx, which is minus 5.
00:26
So this is 5x over 5x minus 40.
00:31
So that's our elasticity of demand.
00:33
But now we're looking at when x equals 4.
00:36
So e of 4 is going to be 5 times 4 divided by 5 times 4 minus 40, which is minus 1.
00:47
So now let's find the values of x and p that maximise the total revenue.
00:52
So the revenue is going to be x times p, which is going to be 40x minus 5x squared...