6. The Valve Corporation, a software entertainment company, recently ran a holiday sale on its popular Steam software program. Using data collected from the sale, it is possible to estimate the demand corresponding to various discounts in the price of the software. Assuming that the original price was $40, the demand for the software can be estimated by the function 1= 3,751,000p-2826, where p is the price and q is the demand. Calculate and interpret the elasticity of demand. p dq q dp E = -

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ISBN:9781337517942
Author:NICHOLSON
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Chapter11: Profit Maximization
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6. The Valve Corporation, a software entertainment company, recently ran a holiday sale on its
popular Steam software program. Using data collected from the sale, it is possible to estimate the
demand corresponding to various discounts in the price of the software. Assuming that the
original price was $40, the demand for the software can be estimated by the function
q= 3,751,000p-2826, where p is the price and q is the demand. Calculate and interpret the
elasticity of demand.
p dq
E = -
q dp
elasticity of demand
interpret the results
Which one the following statements in true for situation? (Circle the correct answer.)
a) Total revenue increases as price increases.
b) Total revenue decreases as price increases.
c) Neither is true.
Transcribed Image Text:6. The Valve Corporation, a software entertainment company, recently ran a holiday sale on its popular Steam software program. Using data collected from the sale, it is possible to estimate the demand corresponding to various discounts in the price of the software. Assuming that the original price was $40, the demand for the software can be estimated by the function q= 3,751,000p-2826, where p is the price and q is the demand. Calculate and interpret the elasticity of demand. p dq E = - q dp elasticity of demand interpret the results Which one the following statements in true for situation? (Circle the correct answer.) a) Total revenue increases as price increases. b) Total revenue decreases as price increases. c) Neither is true.
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