The demand function for a Christmas music CD is given by q=0.75(2500 - p²) where a (measured in units of a hundred) is the quantity demanded per week and p is the unit price in dollars. (a) Evaluate the elasticity at p= 45. E(45) (b) Given the computed elasticity value in part (a), is the Christmas music CD an Elastic or Inelastic item?? (c) Should the unit price be lowered slightly from p = 45 in order to increase revenue?? C (d) Find the value for E to maximize revenue. E = 8.

The demand function for a Christmas music CD is given by q=0.75(2500 - p²) where a (measured in units of a hundred) is the quantity demanded per week and p is the unit price in dollars. (a) Evaluate the elasticity at p= 45. E(45) (b) Given the computed elasticity value in part (a), is the Christmas music CD an Elastic or Inelastic item?? (c) Should the unit price be lowered slightly from p = 45 in order to increase revenue?? C (d) Find the value for E to maximize revenue. E = 8.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The demand function for a Christmas music CD is given by
q = 0.75(2500 – p²)
where a (measured in units of á hundred) is the quantity demanded per week and p is the unit price in dollars.
(a) Evaluate the elasticity at p= 45. E(45)
(b) Given the computed elasticity value in part (a), is the Christmas music CD an Elastic or Inelastic item? ?
(c) Should the unit price be lowered slightly from p= 45 in order to increase revenue? ?
(d) Find the value for E to maximize revenue. E =

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