Answered: On the following graph, use the green…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Elasticity and total revenue

The following graph shows the daily demand curve for bikes in San Francisco.

Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.

Note: You will not be graded on any changes made to this graph.

*graph 1*

On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $30, $45, $60, $75, $90, $105, and $120 per bike.

*graph 2*

According to the midpoint method, the price elasticity of demand between points A and B is approximately ___ .

Suppose the price of bikes is currently $30 per bike, shown as point B on the initial graph. Because the demand between points A and B is ___ , a $15-per-bike increase in price will lead to ___ in total revenue per day.

In general, in order for a price decrease to cause a decrease in total revenue, demand must be ____.

?
1280
1200
Total Revenue
1120
1040
960
880
800
720
640
560
15
30
45
60
75 90 105 120 135 150 165 180
PRICE (Dollars per bike)
TOTAL REVENUE (Dollars)

180
165
150
Total Revenue
135
120
105
90
75
60
45
15
Demand
+
0 3
6.
9
12
15
18
21 24 27 30 33 36
QUANTITY (Bikes)
PRICE (Dollars per bike)
30

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