Answered: a. How much would the firm’s revenue…

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:

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter2: Choice In A World Of Scarcity

Section: Chapter Questions

Problem 12RQ: Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?

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Question

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 (Chooe one) inelastic elastic unitary 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:

Demand is (Choose one) inelastic unitary elastic 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?

A price that maximizes total revenues: $

Demand is (Choose one) unitary elastic inelastic elastic at this point

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