Example Given the demand function q = √2500-2p with domain [0, 25/2], determine (a) the elasticity of demand E (b) the elasticity when p= 20 and interpret your results; (c) the range of prices corresponding to elastic, unitary, and inelastic demand; and (d) the range of quantities corresponding to elastic, unitary, and inelastic demand.

Example Given the demand function q = √2500-2p with domain [0, 25/2], determine (a) the elasticity of demand E (b) the elasticity when p= 20 and interpret your results; (c) the range of prices corresponding to elastic, unitary, and inelastic demand; and (d) the range of quantities corresponding to elastic, unitary, and inelastic demand.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 6SQ: If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is...

See similar textbooks

Similar questions

(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?
If automobiles and gasoline are complements, then their cross-elasticity coefficient is a. strictly greater than 1. b. positive. c. equal to zero. d. negative.
The price elasticity of demand for personal computers is estimated to be 2.2. If the price of personal computers declines by 20 percent, what will be the expected percentage increase in the quantity of computers sold?
If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is evidence that demand is a. price elastic. b. price inelastic. c. unit elastic with respect to price. d. perfectly inelastic.
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
What does a price elasticity of demand of 0.39 mean?
Prove that price elasticity of demand is not the same as the slope of a demand curve.