As part of Government's IDIF initiative, a small technology company in the Eastern Region is developing laptop computers as substitutes to those imported from abroad. Based on market surveys, the company believes the quantity Q (in thousands of units) that will be demanded by consumers is related to the price P (in thousands of cedis) by the relationship Q = 48 – 2P, P >0. a. Find the price elasticity of demand when the price of the laptop is GHC 3,000. b. Determine where the demand is elastic, inelastic, and of unit elasticity with respect to price. c. Interpret the results of part (b) in terms of the behaviour of total revenue as a function of price.
As part of Government's IDIF initiative, a small technology company in the Eastern Region is developing laptop computers as substitutes to those imported from abroad. Based on market surveys, the company believes the quantity Q (in thousands of units) that will be demanded by consumers is related to the price P (in thousands of cedis) by the relationship Q = 48 – 2P, P >0. a. Find the price elasticity of demand when the price of the laptop is GHC 3,000. b. Determine where the demand is elastic, inelastic, and of unit elasticity with respect to price. c. Interpret the results of part (b) in terms of the behaviour of total revenue as a function of price.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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