1. Below is the price and quantityinformation a firm. For example, at aprice of $2.80, 60 units are sold.P1 = 3.20 Q1 = 40P2 = 2.80 Q2 = 60P1 = 2.20 Q1 = 90P2 = 1.80 Q2 = 110P₁ = 1.20 Q1 = 140P2 = 0.80 Q2 = 160a. Construct the demand curve for thisfirm with P on the vertical and Q onthe horizontal axis.b. Using the equation for PED,calculate the price elasticity ofdemand. Use absolute value todetermine and describe the range ofelasticity.c. Using the results from "b" and theequation for TR, analyze therelationship between the ranges ofelasticity and revenues.d. Using the graph from "a" and theanalysis from "c," predict the price thisfirm will likely charge customers. Why?

A demand curve refers to a graphical depiction of the connection between the price of a product and…

1. Below is the price and quantity information a firm. For example, at a price of $2.80, 60 units are sold. P1 = 3.20 Q₁ = 40 P2 = 2.80 Q2 = 60 P₁ = 2.20 Q1 = 90 P2 = 1.80 Q2 = 110 P1 = 1.20 Q1 = 140 P2 = 0.80 Q2 = 160

1. Below is the price and quantity information a firm. For example, at a price of $2.80, 60 units are sold. P1 = 3.20 Q₁ = 40 P2 = 2.80 Q2 = 60 P₁ = 2.20 Q1 = 90 P2 = 1.80 Q2 = 110 P1 = 1.20 Q1 = 140 P2 = 0.80 Q2 = 160

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Below is the price and quantity
information a firm. For example, at a
price of $2.80, 60 units are sold.
P1 = 3.20 Q1 = 40
P2 = 2.80 Q2 = 60
P1 = 2.20 Q1 = 90
P2 = 1.80 Q2 = 110
P₁ = 1.20 Q1 = 140
P2 = 0.80 Q2 = 160
a. Construct the demand curve for this
firm with P on the vertical and Q on
the horizontal axis.
b. Using the equation for PED,
calculate the price elasticity of
demand. Use absolute value to
determine and describe the range of
elasticity.
c. Using the results from "b" and the
equation for TR, analyze the
relationship between the ranges of
elasticity and revenues.
d. Using the graph from "a" and the
analysis from "c," predict the price this
firm will likely charge customers. Why?

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