Answer the following questions based on the accompanying diagram: Price ($) 20 18 16 14 12 10 00 a 4 2 [ 1 2 4 5 6 7 3 Quantity D Instructions: All dollar responses should be entered as whole numbers. Include a minus (-) sign for all negative answ a. How much would the firm's revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this Revenue change: $ Demand is elastic in this range. b. How much would the firm's revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this Revenue change: $1 Demand is inelastic in this range. c. What price maximizes the firm's total revenues? What is the elasticity of demand at this point on the demand curve Price that maximizes total revenues: $ Demand is unitary elastic at this point.
Answer the following questions based on the accompanying diagram: Price ($) 20 18 16 14 12 10 00 a 4 2 [ 1 2 4 5 6 7 3 Quantity D Instructions: All dollar responses should be entered as whole numbers. Include a minus (-) sign for all negative answ a. How much would the firm's revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this Revenue change: $ Demand is elastic in this range. b. How much would the firm's revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this Revenue change: $1 Demand is inelastic in this range. c. What price maximizes the firm's total revenues? What is the elasticity of demand at this point on the demand curve Price that maximizes total revenues: $ Demand is unitary elastic at this point.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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