(b) If the current demand is q = 3, will the revenue increase or decrease if the price is raised slightly?

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adieLv10

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(c) A tailor is currently producing 80 suits per month and sells them for $100 per suit. His monthly demand curve is given by q = 100 – 2/p. Find the current price elasticity of demand and use it to decide whether price should be raised or lowered to increase his revenue.

4. (10 marks) Opad, the blockbuster product of Opple Inc., has a weekly demand q that declines with price p according to q = 1000 e-p/200 (a) Find the elasticity of demand e at the current price of $100. (b) Use the elasticity of demand to calculate the marginal revenue at the current price of $100. Simplify your answer to "calculator ready". (c) If the price is raised by 1%, use the elasticity to estimate the percentage decline in sales.

[10] 5. Currently 1800 people ride a commuter passenger ferry each day and pay $4 for a ticket. The number of people q willing to ride the ferry at price p is determined by the relationship (9-30002 p = 600 The company would like to increase its revenue. Use the price elasticity of demand e to give advice to management on whether it should increase or decrease its price from $4 per passenger. Recall that epag q dp

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(b) If the current demand is q = 3, will the revenue increase or decrease if the price is raised slightly?

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