SOLUTION: A South African country exports gold and estimates the demand function to be D(p)=400√2600-p. If the country wants to raise revenues to improve the balance of payments, shou

Question 900809: A South African country exports gold and estimates the demand function to be D(p)=400√2600-p. If the country wants to raise revenues to improve the balance of payments, should it raise or lower the price from the present level of $1600 per ounce?
Little help please. I have always struggled with word problems.
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A South African country exports gold and estimates the demand function to be D(p)=400√2600-p. If the country wants to raise revenues to improve the balance of payments, should it raise or lower the price from the present level of $1600 per ounce?
Little help please. I have always struggled with word problems.

Based on the demand equation/function, and a price of $1,600, per oz, the demand for gold would be:

oz, with revenues of approximately $M.

Based on the demand equation/function, and a $100, per oz price INCREASE, to $1,700, per oz, the demand

for gold would be: oz, with revenues of $M

Based on the demand equation/function, and a $100, per oz price REDUCTION, to $1,500, per oz, the demand

for gold would be: oz, with revenues of approximately $M.

It is quite obvious that in this situation, and most similar ones, the cheaper the price, the higher the demand.

However, in this case, an INCREASE in price, which leads to a lower demand would DEFINITELY garner higher revenues.

Thus, the price should be INCREASED.

SOLUTION: A South African country exports gold and estimates the demand function to be D(p)=400&#8730;2600-p. If the country wants to raise revenues to improve the balance of payments, shou

SOLUTION: A South African country exports gold and estimates the demand function to be D(p)=400√2600-p. If the country wants to raise revenues to improve the balance of payments, shou