Assume the company revises its revenue projections


Given the revenue function calculate the marginal revenue, marginal cost, optimal revenue.

A firm estimates that the cost (in millions of $) of developing and introducing a new product over t years equals C = 500 - 20t + t2. Present value revenues related to time t are estimated at R = 750 + 35t - 1.5t2. The firm knows that the new product cannot be completed before 6 years.

Assume the company revises its revenue projections in response to a patent race with another company. Its new estimated revenue function is R = 750 + 35t - 4.0t2. What is the optimal project duration now?

 

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Business Economics: Assume the company revises its revenue projections
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