6. Elasticity and total revenueThe following graph shows the daily demand curve for bikes in San Diego.Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.Note: You will not be graded on any changes made to this graph.240220200Total Revenue180160* 14012010080604020Demand182736455463728190108QUANTITY (Bikes)On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $40, $60, $80, $100, $120,$140, and $160 per bike.On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $40, $60, $80, $100, $120,$140, and $160 per bike.62505820Total Revenue53904960w 4530410036703240281023800.4780 100 120 140 160 180 200 220 240PRICE (Dollars per bike)2040602.1431.5According to the midpoint method, the price elasticity of demand between points A and B is approximatelySuppose the price of bikes is currently $60 per bike, shown as point B on the initial graph. Because the demand between points A and B isinelastic,a $20-per-bike increase in price will lead to an increase v in total revenue per day.In general, in order for a price decrease to cause a decrease in total revenue, demand must be inelasticTOTAL REVENUE (Dollars)PRICE (Dollars per bike)

Total revenue refers to the total amount of money a business receives from the sale of its products…

Answered: The following graph shows the daily…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 6PA: Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000)...

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Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000) Quantity Demanded (income = 12,000) 8 40 DVDs 50 DVDs 10 32 45 12 24 30 14 16 20 16 8 12 a. Use the midpoint method to calculate your price elasticity of demand as the price of DVDs increases from 8 to 10 if (i) your income is 10,000 and (ii) your income is 12,000. b. Calculate your income elasticity of demand as your income increases from 10,000 to 12,000 if (i) the price is 12 and (ii) the price is 16.
The equation for a demand curve is P=2/Q. What is the elasticity of demand as price falls from 5 to 4? What is the elasticity of demand as the price falls from 9 to 8? Would you expect these answers to be the same?
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The following graph shows the daily demand curve for bikes in San Diego. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph.