Given the demand function D(p) = 325 – 4p², Find the Elasticity of Demand at a price of $2 At this price, we would say the demand is: Elastic O Inelastic O Unitary Based on this, to increase revenue we should: O Raise Prices O Keep Prices Unchanged O Lower Prices
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
![### Demand Function and Elasticity
**Given the demand function:**
\[ D(p) = 325 - 4p^2 \]
**Problem:**
Find the Elasticity of Demand at a price of $2.
**Elasticity Calculation Box:**
[Input Box]
**At this price, we would say the demand is:**
- ○ Elastic
- ○ Inelastic
- ○ Unitary
**Based on this, to increase revenue we should:**
- ○ Raise Prices
- ○ Keep Prices Unchanged
- ○ Lower Prices
### Explanation
**Demand Elasticity:**
Demand elasticity measures how the quantity demanded responds to changes in price. The categories include:
- **Elastic:** Demand is sensitive to price changes.
- **Inelastic:** Demand is not sensitive to price changes.
- **Unitary:** Proportional response in demand to price changes.
**Revenue Implications:**
Understanding elasticity helps determine pricing strategies to maximize revenue:
- **Elastic Demand:** Lowering prices might increase revenue.
- **Inelastic Demand:** Raising prices might increase revenue.
- **Unitary Demand:** Changing prices might not affect revenue significantly.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F88d18a19-21f4-41fb-afe0-306734676977%2F309b5322-1a57-4d6e-b750-dd9ea103368c%2Fhrqcr7d_processed.png&w=3840&q=75)
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