Answered: Calculate the total revenue for each…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.3P: (Categories of Price Elasticity of Demand) For each of the following absolute values of price...

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Question

Calculate the total revenue for each level of demand and post into the below table:

Figure 1: The Demand Schedule for Barbeque Dinners

Price

Quantity Demanded

Total Revenue

Elasticity Coefficient

Elastic or Inelastic

100

__________

XXXX

__________

Using the midpoints formula presented, calculate the price elasticity of Demand coefficient for each price levels, starting with the coefficient for the $4 to $6 level. For each coefficient, indicate each type of elasticity: elastic demand, inelastic demand, or unitary demand. Post your answers into the table, Figure 1.

Expert Solution

Step 1

Price	Quantity Demanded	Total Revenue	Elasticity Coefficient	Elastic or Inelastic
$4	100	= 4*100 = 400	XXXX	XXXX
6	80	=6*80 = 480	= [(80-100)/[(80+100)/2]]/[(6-4)/[(6+4)/2]] = \|-0.55\| = 0.55	Inelastic
8	60	= 8*60 = 480	= [(60-80)/[(60+80)/2]]/[(8-6)/[(8+6)/2]] = \|-1\| = 1	Unitary
10	40	=10*40 = 400	= [(40-60)/[(40+60)/2]]/[(10-8)/[(10+8)/2]] = \|-1.8\| = 1.8	Elastic
12	20	= 12 * 20 =240	= [(20-40)/[(20+40)/2]]/[(12-10)/[(12+10)/2]] = \|-3.67\| = 3.67	Elastic
14	1	= 14 * 1 =14	= [(1-20)/[(1+20)/2]]/[(14-12)/[(14+12)/2]] = \|-11.76\| = 11.76	Elastic

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