and $80 per bike. 1740 1620 Total Revenue 1500 1380 1260 1140 1020 900 780 10 20 30 40 50 60 70 80 90 100 110 120 PRICE (Dolars per bike) According to the midpoint method, the price elasticity of demand between points A and B is approximately Suppose the price of bikes is currently $30 per bike, shown as point B on the initial graph. Because the demand between points A and B is ,a $10-per-bike increase in price will lead to in total revenue per day. In general, in order for a price decrease to cause a decrease in total revenue, demand must be TOTAL REVENUE (Dollars)
and $80 per bike. 1740 1620 Total Revenue 1500 1380 1260 1140 1020 900 780 10 20 30 40 50 60 70 80 90 100 110 120 PRICE (Dolars per bike) According to the midpoint method, the price elasticity of demand between points A and B is approximately Suppose the price of bikes is currently $30 per bike, shown as point B on the initial graph. Because the demand between points A and B is ,a $10-per-bike increase in price will lead to in total revenue per day. In general, in order for a price decrease to cause a decrease in total revenue, demand must be TOTAL REVENUE (Dollars)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
6. Elasticity and total revenue
The following graph shows the daily demand curve for bikes in Dallas.
Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.
Note: You will not be graded on any changes made to this graph.
Transcribed Image Text:6. Elasticity and total revenue
The following graph shows the daily demand curve for bikes in Dallas.
Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.
Note: You will not be graded on any changes made to this graph.
120
110
100
Total Revenue
90
80
70
60
50
40
30
20
10
Demand
10
15
20
25
30
35
40
45
50
55
60
QUANTITY (Bikes)
PRICE (Dollars per bike)
Transcribed Image Text:On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $20, $30, $40, $50, $60, $70,
and $80 per bike.
1740
1620
Total Revenue
1500
1380
1260
1140
1020
900
780
660
10
20
30
40
50
60
70
80
90
100 110 120
PRICE (Dollars per bike)
According to the midpoint method, the price elasticity of demand between points A and B is approximately
Suppose the price of bikes is currently $30 per bike, shown as point B on the initial graph. Because the demand between points A and B is
, a $10-per-bike increase in price will lead to
in total revenue per day.
In general, in order for a price decrease to cause a decrease in total revenue, demand must be
TOTAL REVENUE (Dollars)
Expert Solution
Step 1
Price Elasticity of demand represents percentage change in price due to percentage change in price .
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