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Midterm Notes

# Midterm Notes - Mathematics II Midterm Prep Optimization...

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Mathematics II Midterm Prep Optimization Applications: Revenue = Quantity sold x Price per unit Profit = Revenue - Cost Net collection = Amount receivable collected - Amount of cost Price elasticity of demand = (% change in demand / % change in price) = (Δq / q) / (Δp / p) (p / q) . (Δq / Δp) Point elasticity of demand = lim Δ p 0 Δ / ) / ( q q Δ / p p η = (p / q) . f(p) ̍ e.g. η for function q = f(p) = 500-25p & when p = 10 η = 10 / f(10) . (-25) = 10 / [500-25(10)] . (-25) = - (10 / 250) . 25 = -1 η < 1 : Inelastic demand (% change in demand < % change in price) η > 1 : Elastic demand (% change in demand > % change in price) η = 1 : Unit elastic demand (% change in demand = % change in price) Markup: Markup = Selling price of product - Cost of product Profit = Markup - Cost of business Markup on cost Selling price = Cost + Markup Markup = Rate x Cost Markup on selling price Cost = Selling price - Markup

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Markup = Rate x Selling price Markup rate on selling price = Markup rate on cost / (1 + Markup rate on cost) Markup rate on cost = Markup rate on selling price x (1 + Markup rate on cost) Markdown amount = Rate x Selling price Shrinkage example
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