Q1: Demand in a market is represented by Q = 500 – 50P where Pis measured in dollars per unit and Q is measured in units perweek. Note: Demand in this question is identical to that in Q1 ofAssignment #10.
a) Complete the following table. Find elasticity between $10 and$8, between $8 and $6, between $6 and $4, between $4 and $2, andbetween $2 and $0. Show elasticity to two decimal places. Do notround your answers too early or your final result will be lessaccurate.
Price (P) | Quantity Demanded (QD) | Total Revenue (TR) | Price Elasticity of Demand (εd) | Demand is |
$10 | | | //////////////////////// | //////////////////////// |
$9 | | | | |
$8 | | | //////////////////////// | //////////////////////// |
$7 | | | | |
$6 | | | //////////////////////// | //////////////////////// |
$5 | | | | |
$4 | | | //////////////////////// | //////////////////////// |
$3 | | | | |
$2 | | | //////////////////////// | //////////////////////// |
$1 | | | | |
$0 | | | //////////////////////// | //////////////////////// |
b) Graph the relationship between the quantity demanded andtotal revenue using the grid on the next page.
c) Is total revenue positively related, negatively related orunrelated to the price of the product when demand is elastic?
d) Is demand perfectly elastic, elastic, unit elastic, inelasticor perfectly inelastic when total revenue is at its maximum?
Q2: The demand for a product is represented by Q = 210 – 3P. Atwhat price is demand unit elastic? Show clearly how you arrived atyour answer.
