EBK MICROECONOMICS
21st Edition
ISBN: 8220103960151
Author: McConnell
Publisher: YUZU
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Question
Chapter 12, Problem 3RQ
To determine
Marginal revenue, total revenue, elasticity of demand .
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Consider the demand function:
where q = quantity, p = price
d)
Q = 2p²60p + 700
n
For what values of p is demand (i) elastic; (ii) inelastic? What is the
effect of a small price reduction on Total Revenue, when demand is
(i) elastic; (ii) inelastic?
e) Sketch the graphs of the Demand function, Total Revenue and
Marginal Revenue as functions of p.
Explain, using words and diagrams only, the relationship between
Marginal Revenue and the Elasticity of Demand.
Q 2. i) How can we differentiate Elastic and Inelastic Price
Elasticity of Demand?
ii) Calculate Total Revenue (TR), Marginal Revenue
(MR) and Average Revenue (AR) for the following set of
data.
Quantity
Price
Total
Marginal
Revenue
Revenue
80
1
76
2
72
3
68
4
64
5
60
6
56
7
52
8
48
44
If price increases what will be the effect on Total Revenue
(TR) in case of
a) Elastic, b) Inelastic & c) Unitary Elastic Price
Elasticity of Demand?
1. Suppose for some firm, 14 units were sold at the initial price of $33 and after the price rose, 10 units were sold at the new price of $39. Compute the price elasticity of demand and interpret the result.
2. Returning to your computation in #1, will revenue have increased or decreased as a result of that price change? On the basis of this information do we know enough to assess whether the price change was a wise decision for the firm? Explain.
3. Ben purchased 12 gallons of gasoline each day. When the price of gasoline was $2.80 per gallon, Ben purchased 12 gallons of gasoline. When the price of gasoline fell to $2.10 per gallon, Ben purchased 12 gallons of gasoline. Use price elasticity of demand to describe Ben’s demand for gasoline. What does Ben’s demand curve for gasoline look like?
Chapter 12 Solutions
EBK MICROECONOMICS
Ch. 12.4 - The MR curve lies below the demand curve in this...Ch. 12.4 - Prob. 2QQCh. 12.4 - Prob. 3QQCh. 12.4 - Prob. 4QQCh. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQ
Ch. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - 10. LAST WORD Using Big Data to set personalized...Ch. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - Prob. 3PCh. 12 - Prob. 4PCh. 12 - Prob. 5P
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