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Answer the following questions based on the accompanying diagram: Price ($) 20 18 16 14 12 10 8 00 6 4 N 1 2 3 4 Quantity 5 6 7 D Instructions: All dollar responses should be entered as whole numbers. Include a minus (-) sign for all negative answers. a. How much would the firm's revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this range? Revenue change: $ Demand is elastic in this range. b. How much would the firm's revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this range? Revenue change: $1 Demand is inelastic in this range. c. What price maximizes the firm's total revenues? What is the elasticity of demand at this point on the demand curve? Price that maximizes total revenues: $ Demand is unitary elastic at this point.

Answer the following questions based on the accompanying diagram: Price ($) 20 18 16 14 12 10 8 00 6 4 N 1 2 3 4 Quantity 5 6 7 D Instructions: All dollar responses should be entered as whole numbers. Include a minus (-) sign for all negative answers. a. How much would the firm's revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this range? Revenue change: $ Demand is elastic in this range. b. How much would the firm's revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this range? Revenue change: $1 Demand is inelastic in this range. c. What price maximizes the firm's total revenues? What is the elasticity of demand at this point on the demand curve? Price that maximizes total revenues: $ Demand is unitary elastic at this point.

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter7: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 13CQ: Suppose Erin, the owner-manager of a local hotel projects the following demand for her rooms: a....
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Answer the following questions based on the accompanying diagram: Price ($) 20 18 16 14 12 10 8 6 4 2 0 1 2 3 4 Quantity 8 5 6 7 Instructions: All dollar responses should be entered as whole numbers. Include a minus (-) sign for all negative answers. a. How much would the firm's revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this range? Revenue change: $ Demand is elastic b. How much would the firm's revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this range? Revenue change: $ Demand is inelastic in this range. c. What price maximizes the firm's total revenues? What is the elasticity of demand at this point on the demand curve? Price that maximizes total revenues: $ Demand is unitary elastic at this point. -8 D in this range.
Transcribed Image Text:Answer the following questions based on the accompanying diagram: Price ($) 20 18 16 14 12 10 8 6 4 2 0 1 2 3 4 Quantity 8 5 6 7 Instructions: All dollar responses should be entered as whole numbers. Include a minus (-) sign for all negative answers. a. How much would the firm's revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this range? Revenue change: $ Demand is elastic b. How much would the firm's revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this range? Revenue change: $ Demand is inelastic in this range. c. What price maximizes the firm's total revenues? What is the elasticity of demand at this point on the demand curve? Price that maximizes total revenues: $ Demand is unitary elastic at this point. -8 D in this range.
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