Tutorial Exercise Worldwide annual sales of smartphones in over a 5 year period were projected to be approximately q = -10p + 4,440 million phones at a selling price of sp per phone. (a) obtain a formula for the price elasticity of demand E. (b) In one particular year the actual selling price was $271 per phone. What was the corresponding price elasticity of demand? Interpret your answer. (c) Use your formula for E to determine the selling price that would have resulted in the largest annual revenue. What, to the nearest $10 million, would have been the resulting annual revenue?

Tutorial Exercise Worldwide annual sales of smartphones in over a 5 year period were projected to be approximately q = -10p + 4,440 million phones at a selling price of sp per phone. (a) obtain a formula for the price elasticity of demand E. (b) In one particular year the actual selling price was $271 per phone. What was the corresponding price elasticity of demand? Interpret your answer. (c) Use your formula for E to determine the selling price that would have resulted in the largest annual revenue. What, to the nearest $10 million, would have been the resulting annual revenue?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter12: More Realistic And Complex Pricing

Section: Chapter Questions

Problem 12.1IP

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