Suppose that over a range of prices, the price elasticity of demand varies from 15.0 to 2.5. Over another range of prices, the price elasticity of demand varies from1.5 to 0.75. What can you say about total revenue and the total revenue curve over these two ranges of demand curve as price fall?

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Insha FatimaLv10

28 Sep 2019

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Related questions

For the following demand function, Q_D = 100 - P, answer the following questions

a. what is the point elasticity of demand at P = 80?

b. what is the point elasticity of demand at P = 20?

c. at what price is demand unitary price elastic?

d. demand is price elastic for prices between __________ and ___________

e. Consider your answer to part d., what happens to revenues as prices decrease within

this range? Are marginal revenues positive, constant, or negative in this range of

prices?

f. demand is price inelastic for prices between __________ and ___________

g. Consider your answer to part f., what happens to revenues as prices decrease within

this range? Are marginal revenues positive, constant, or negative in this range of

prices?

h. How many units of this good do a firm facing this demand curve have to produce to

maximize its revenues?

i. What are the maximum revenues for this firm?

j. Draw the total revenue curve associated with this demand curve.

coffeeprairie-dog291

16 Suppose that Jimmy John's Sandwich shop raised the price of their sandwiches by $1 per sandwich and their total revenue dropped. From this, we know A. demand for Jimmy John's sandwiches is income elastic over this range of prices, B. demand for Jimmy John's sandwiches is unit elastic over this range of prices. c. demand for Jimmy John's sandwiches is income inelastic over this range of prices. D. demand for Jimmy John's sandwiches is price inelastic over this range of prices, E. demand for Jimmy John's sandwiches is price elastic over this range of prices.

a. Compute the price elasticity of demand between these two points.

b. Would you expect total revenues to rise or fall? Explain.

c. Suppose you have reduced the average price of a meal to $18 and are considering a further reduction to $16. Another survey shows that the quantity demanded of meals will increase from 450 to 500 per day. Compute the price elasticity of demand between these two points.

d. Would you expect total revenue to rise or fall as a result of this second price reduction? Explain.

e. Compute total revenue at the three meal prices. Do these totals confirm your answers in (b) and (d) above?