Alter the graph in order to explore the change in total revenue in response to a price change with different demand elasticities. Notice that once price goes below $1.50, total revenue decreases in both cases of demand elasticity. a. What important insights does this illustrate?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Please answer both a and b please answer explain

 

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Click on the graph below to make it interactive and answer
the following questions.
Old
revenue$600
Price
2.00
New
revenue$6.00
Elastic demand-
Change the price
3
Old
revenue$6.00
Price
-$2.00-
Quantity
New
revenue)
$6.00
Q
Inelastic Demand
3
Quantit
Macmillan Learning
Alter the graph in order to explore the change in total
revenue in response to a price change with different
demand elasticities.
Notice that once price goes below $1.50, total revenue
decreases in both cases of demand elasticity.
a. What important insights does this illustrate?
Elasticity measures responsiveness in percent
change, which is different than slope.
Elasticity is constant along a linear demand curve.
Elasticity is unitary along a linear demand curve.
With linear demand curves, elasticity will
eventually will differ as you move along a curve.
b. What can be inferred about the elasticity of both
Transcribed Image Text:Click on the graph below to make it interactive and answer the following questions. Old revenue$600 Price 2.00 New revenue$6.00 Elastic demand- Change the price 3 Old revenue$6.00 Price -$2.00- Quantity New revenue) $6.00 Q Inelastic Demand 3 Quantit Macmillan Learning Alter the graph in order to explore the change in total revenue in response to a price change with different demand elasticities. Notice that once price goes below $1.50, total revenue decreases in both cases of demand elasticity. a. What important insights does this illustrate? Elasticity measures responsiveness in percent change, which is different than slope. Elasticity is constant along a linear demand curve. Elasticity is unitary along a linear demand curve. With linear demand curves, elasticity will eventually will differ as you move along a curve. b. What can be inferred about the elasticity of both
b. What can be inferred about the elasticity of both
curves once price goes below $1.50?
O Enter Choice
Demand is elastic for both curves once price drops
below $1.50.
O There is not enough information to make a
determination.
O Demand is inelastic for both curves once price
drops below $1.50.
Transcribed Image Text:b. What can be inferred about the elasticity of both curves once price goes below $1.50? O Enter Choice Demand is elastic for both curves once price drops below $1.50. O There is not enough information to make a determination. O Demand is inelastic for both curves once price drops below $1.50.
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