Demand for carpet cleaner rentals at a rental store is described by the equation: Q = 4,000 - 500P, where Q denoted the number of carpet cleaner rental per week and P is the rental price in dollars. Determine the point price elasticity of demand at (1) P = $3 and (2) P = $4.5 and (3) comment on the change in elasticity. (4) Ignoring the previous parts, what is the appropriate price to set in order to maximize profit for a good with a marginal cost of $35 and a demand elasticity of -2?

Demand for carpet cleaner rentals at a rental store is described by the equation: Q = 4,000 - 500P, where Q denoted the number of carpet cleaner rental per week and P is the rental price in dollars. Determine the point price elasticity of demand at (1) P = $3 and (2) P = $4.5 and (3) comment on the change in elasticity. (4) Ignoring the previous parts, what is the appropriate price to set in order to maximize profit for a good with a marginal cost of $35 and a demand elasticity of -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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