Tutorial Exercise Worldwide annual sales of smartphones in over a 5 year period were projected to be approximately q = -10p + 4,440 million phones at a selling price of sp per phone. (a) obtain a formula for the price elasticity of demand E. (b) In one particular year the actual selling price was $271 per phone. What was the corresponding price elasticity of demand? Interpret your answer. (c) Use your formula for E to determine the selling price that would have resulted in the largest annual revenue. What, to the nearest $10 million, would have been the resulting annual revenue?
Tutorial Exercise Worldwide annual sales of smartphones in over a 5 year period were projected to be approximately q = -10p + 4,440 million phones at a selling price of sp per phone. (a) obtain a formula for the price elasticity of demand E. (b) In one particular year the actual selling price was $271 per phone. What was the corresponding price elasticity of demand? Interpret your answer. (c) Use your formula for E to determine the selling price that would have resulted in the largest annual revenue. What, to the nearest $10 million, would have been the resulting annual revenue?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter3: Demand Analysis
Section: Chapter Questions
Problem 7E: In an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price...
Related questions
Question
Worldwide annual sales of smart phones in over a five-year period were projected to be approximately
q=-10p+4440 million phones at a selling price of $P per phone.
Obtain a formula for the price of elasticity of demand E.
In one particular year the actual selling price was $271 per phone. What was the corresponding price elasticity of demand?
Use your formula for E to determine the selling price that would’ve resulted in the largest annual revenue. What, nearest to the nearest 10 million, would have been the resulting annual revenue?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning