Answered: In this problem, p is in dollars and q…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 23SQ: If automobiles and gasoline are complements, then their cross-elasticity coefficient is a. strictly...

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Question

In this problem, p is in dollars and q is the number of units.

(a)

Find the elasticity of the demand function

2p + 3q = 270

at the price

p = 15.

(b)

How will a price increase affect total revenue?

Since the demand is elastic, an increase in price will increase the total revenue.Since the demand is unitary, there will be no change in the revenue with a price increase. Since the demand is inelastic, an increase in price will increase the total revenue.Since the demand is elastic, an increase in price will decrease the total revenue.Since the demand is inelastic, an increase in price will decrease the total revenue.

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