Use the following table to work Problems 1 to 3. The demand schedule for computer chips is Price (dollar per chip) Quantity demanded (million of chips per year) 200 50 250 45 300 40 350 35 400 30 Questions 1) What happens to total revenue if the price falls from $400 to $350 a chip and from $350 to $300 a chip? At what price is total revenue at a maximum? 2) At an average price of $350, is the demand for chips elastic, inelastic, or unit elastic? Use the total revenue test to answer this question. 3) At $250 a chip, is the demand for chips elastic or inelastic? Use the total revenue test to answer this question.
Use the following table to work Problems 1 to 3. The demand schedule for computer chips is Price (dollar per chip) Quantity demanded (million of chips per year) 200 50 250 45 300 40 350 35 400 30 Questions 1) What happens to total revenue if the price falls from $400 to $350 a chip and from $350 to $300 a chip? At what price is total revenue at a maximum? 2) At an average price of $350, is the demand for chips elastic, inelastic, or unit elastic? Use the total revenue test to answer this question. 3) At $250 a chip, is the demand for chips elastic or inelastic? Use the total revenue test to answer this question.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
Problem 4PA: A price change causes the quantity demanded of a good to decrease by 30 percent, while the total...
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Question
Use the following table to work Problems 1 to 3.
The
|
(dollar per chip) |
Quantity demanded (million of chips per year) |
| 200 | 50 |
| 250 | 45 |
| 300 | 40 |
| 350 | 35 |
| 400 | 30 |
Questions
1) What happens to total revenue if the price falls from $400 to $350 a chip and from $350 to $300 a chip? At what price is total revenue at a maximum?
2) At an average price of $350, is the demand for chips elastic, inelastic, or unit elastic? Use the total revenue test to answer this question.
3) At $250 a chip, is the demand for chips elastic or inelastic? Use the total revenue test to answer this question.
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