3. (20%) Elasticity (related to Total Revenue): (Please show your steps & decision rules) The demand schedule for a specific computer software is as follows- Please use the relationship between Elasticity and TR (total revenue) to make judgment. Quantity demanded (in million) Price (per copy of software) S630 640 660 64 61 59 55 690 750 53 765 50 775 820 850 49 47 45 43 860 a. What type of elasticity (elastic, inelastic, or others) is this demand if the price of this software decreases from S750 to $640? (2%) explain why and show your steps. b. What type of elasticity (elastic, inelastic or others) is this demand if the price of this software increases from S690 to $765? (2%) explain why and show your steps. c. At what price is total revenue a maximum and what quantity sold? 2% Show your calculation/numbers d. When the price increases from S660 to $775, is the demand for this software elastic or inelastic or others? Explain why. 2% e. When the price decreases from $850 to $765, is the demand for this software elastic or inelastic or others? Explain why. 2%

3. (20%) Elasticity (related to Total Revenue): (Please show your steps & decision rules) The demand schedule for a specific computer software is as follows- Please use the relationship between Elasticity and TR (total revenue) to make judgment. Quantity demanded (in million) Price (per copy of software) S630 640 660 64 61 59 55 690 750 53 765 50 775 820 850 49 47 45 43 860 a. What type of elasticity (elastic, inelastic, or others) is this demand if the price of this software decreases from S750 to $640? (2%) explain why and show your steps. b. What type of elasticity (elastic, inelastic or others) is this demand if the price of this software increases from S690 to $765? (2%) explain why and show your steps. c. At what price is total revenue a maximum and what quantity sold? 2% Show your calculation/numbers d. When the price increases from S660 to $775, is the demand for this software elastic or inelastic or others? Explain why. 2% e. When the price decreases from $850 to $765, is the demand for this software elastic or inelastic or others? Explain why. 2%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. Suppose that the price elasticity of the demand is 0.76. If we increase the price ofthe the demanded product, how would this affect the revenue? Explain
3. The following table gives the supply schedule for Purcell Ltd, a UK based rug producer. Price (£) Quantity Supplied (Qs) 10 0 20 15 30 21 40 28 (i) What does the price elasticity of supply (PES) measure? (ii) How is it calculated? Write down the full formulae. (iii) Assume that the current price is £20. Calculate the price elasticity of supply if the price increases to £30 (show all your calculations). (iv) Is supply elastic, unit-elastic, or inelastic? Explain why. (v) What would the slope of the supply curve look like? (Hint: Relatively flat or steep supply curve) Based on your calculation and your analysis, draw the supply curve for Purcell Ltd. (vi) Would you expect the PES of rugs to be different in the short term and the long term? Explain your answer in detail.
2b please
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