Answered: Price ($) 20 18 16 14 12 10 8. 4 D…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Answer the following questions based on the accompanying diagram. a. How much would the firm’s revenue change if it lowered the price from $12 to $10? Is demand elastic or inelastic in this range? b. How much would the firm’s revenue change if it lowered the price from $4 to $2? Is demand elastic or inelastic in this range? c. What price maximizes the firm’s total revenues? What is the elasticity of demand at this point on the demand curve? Answer the following questions based on the accompanying diagram. a. How much would the firm’s revenue change if it lowered the price from $12 to $10? Is demand elastic or inelastic in this range? b. How much would the firm’s revenue change if it lowered the price from $4 to $2? Is demand elastic or inelastic in this range? c. What price maximizes the firm’s total revenues? What is the elasticity of demand at this point on the demand curve?

Price ($)
20
18
16
14
12
10
8.
4
D
Quantity
4
5
3.
2.

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