You have been hired as an economic consultant concerning the world demand for oil. The demand function is q = D(p) = 50000 + 300p - 3p^2, for 0 < x ≤ 180, where q is measured in millions of barrels of oil per day at a price of p dollars per barrel. Find the price elasticity of demand equation. Find the elasticity at a price of $135 per barrel. i. State whether demand is elastic, inelastic, or unit elastic at that price. ii. If price were increased by 5%, by how much will quantity demanded change? iii. Based on the elasticity of demand, how will this 5% increase in price impact total revenue (will it increase, decrease or remain unchanged)? Explain how we know. iv. Prove you are right by finding total revenue at $135 and at a 5% increase in price.
You have been hired as an economic consultant concerning the world demand for oil. The demand function is q = D(p) = 50000 + 300p - 3p^2, for 0 < x ≤ 180, where q is measured in millions of barrels of oil per day at a price of p dollars per barrel. Find the price elasticity of demand equation. Find the elasticity at a price of $135 per barrel. i. State whether demand is elastic, inelastic, or unit elastic at that price. ii. If price were increased by 5%, by how much will quantity demanded change? iii. Based on the elasticity of demand, how will this 5% increase in price impact total revenue (will it increase, decrease or remain unchanged)? Explain how we know. iv. Prove you are right by finding total revenue at $135 and at a 5% increase in price.
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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You have been hired as an economic consultant concerning the world demand for oil. The demand function is q = D(p) = 50000 + 300p - 3p^2, for 0 < x ≤ 180, where q is measured in millions of barrels of oil per day at a price of p dollars per barrel.
- Find the price elasticity of demand equation.
- Find the elasticity at a price of $135 per barrel.
i. State whether demand is elastic, inelastic, or unit elastic at that price. ii. If price were increased by 5%, by how much will quantity demanded
change?
iii. Based on the elasticity of demand, how will this 5% increase in price impact total revenue (will it increase, decrease or remain unchanged)? Explain how we know.
iv. Prove you are right by finding total revenue at $135 and at a 5% increase in price.
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