(a) The revenue at different price levels and check the elasticity at that price range.

Question

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Answer 1

Question

Chapter 3, Problem 1CACQ

To determine

(a)

The revenue at different price levels and check the elasticity at that price range.

Expert Solution

Answer to Problem 1CACQ

Revenue increases and demand is elastic in this range.

Explanation of Solution

If price is fall from $12 to $10,

When P = $12,

Revenue = P*Q

= $12*1

= $12

When P = $10

Revenue = $10*2 = $20

Therefore, if price is fall from $12 to $10 then the revenue is rises from $12 to $20.

In this range, the ratio of price and quantity is greater than 1, i.e.,

pq=121=12>1pq=102=5>1

So, demand is elastic here.

Economics Concept Introduction

Elasticity shows the responsiveness of quantity demanded due to the change in the price of a commodity. The change in revenue due to the change in price depends upon the elasticity of the demand curve.

If demand is elastic, an increase (decrease) in price will lead to a decrease (increase) in total revenue. If the demand is inelastic, an increase (decrease) in price will lead to an increase (decrease) in total revenue. Total revenue is maximized at the point where demand is unitary elastic.

To determine

(b)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenue is decreases here and demand is inelastic.

Explanation of Solution

If price is fall from $4 to $2

When P = $4,

Revenue = P*Q

= $4*5

= $20

When P = $2

Revenue = $2*6 = $12

Therefore, if price is fall from $4 to $2 then the revenue is fall from $20 to $12.

In this range, the ratio of price and quantity is less than 1, i.e.,

pq=45=0.8<1pq=26=0.33<1

So, demand is inelastic here.

To determine

(c)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenueis maximum at p = $7 and elasticity at this price is equal to 1.

Explanation of Solution

Total revenue is maximized at the point where demand is unitary elastic.

When the percentage change in price is equal to the percentage change in quantity demanded, then the demand is unitary elastic.

At P = $7

Q = 3.5

Revenue = $24.5

When p = $7 and Q = 3.5, the elasticity is equal to 1.

εp=dQdP⋅PQ=12⋅73.5=1

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Answer 2

Question

Chapter 3, Problem 1CACQ

To determine

(a)

The revenue at different price levels and check the elasticity at that price range.

Expert Solution

Answer to Problem 1CACQ

Revenue increases and demand is elastic in this range.

Explanation of Solution

If price is fall from $12 to $10,

When P = $12,

Revenue = P*Q

= $12*1

= $12

When P = $10

Revenue = $10*2 = $20

Therefore, if price is fall from $12 to $10 then the revenue is rises from $12 to $20.

In this range, the ratio of price and quantity is greater than 1, i.e.,

pq=121=12>1pq=102=5>1

So, demand is elastic here.

Economics Concept Introduction

Elasticity shows the responsiveness of quantity demanded due to the change in the price of a commodity. The change in revenue due to the change in price depends upon the elasticity of the demand curve.

If demand is elastic, an increase (decrease) in price will lead to a decrease (increase) in total revenue. If the demand is inelastic, an increase (decrease) in price will lead to an increase (decrease) in total revenue. Total revenue is maximized at the point where demand is unitary elastic.

To determine

(b)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenue is decreases here and demand is inelastic.

Explanation of Solution

If price is fall from $4 to $2

When P = $4,

Revenue = P*Q

= $4*5

= $20

When P = $2

Revenue = $2*6 = $12

Therefore, if price is fall from $4 to $2 then the revenue is fall from $20 to $12.

In this range, the ratio of price and quantity is less than 1, i.e.,

pq=45=0.8<1pq=26=0.33<1

So, demand is inelastic here.

To determine

(c)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenueis maximum at p = $7 and elasticity at this price is equal to 1.

Explanation of Solution

Total revenue is maximized at the point where demand is unitary elastic.

When the percentage change in price is equal to the percentage change in quantity demanded, then the demand is unitary elastic.

At P = $7

Q = 3.5

Revenue = $24.5

When p = $7 and Q = 3.5, the elasticity is equal to 1.

εp=dQdP⋅PQ=12⋅73.5=1

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Answer 3

Question

Chapter 3, Problem 1CACQ

To determine

(a)

The revenue at different price levels and check the elasticity at that price range.

Expert Solution

Answer to Problem 1CACQ

Revenue increases and demand is elastic in this range.

Explanation of Solution

If price is fall from $12 to $10,

When P = $12,

Revenue = P*Q

= $12*1

= $12

When P = $10

Revenue = $10*2 = $20

Therefore, if price is fall from $12 to $10 then the revenue is rises from $12 to $20.

In this range, the ratio of price and quantity is greater than 1, i.e.,

pq=121=12>1pq=102=5>1

So, demand is elastic here.

Economics Concept Introduction

Elasticity shows the responsiveness of quantity demanded due to the change in the price of a commodity. The change in revenue due to the change in price depends upon the elasticity of the demand curve.

If demand is elastic, an increase (decrease) in price will lead to a decrease (increase) in total revenue. If the demand is inelastic, an increase (decrease) in price will lead to an increase (decrease) in total revenue. Total revenue is maximized at the point where demand is unitary elastic.

To determine

(b)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenue is decreases here and demand is inelastic.

Explanation of Solution

If price is fall from $4 to $2

When P = $4,

Revenue = P*Q

= $4*5

= $20

When P = $2

Revenue = $2*6 = $12

Therefore, if price is fall from $4 to $2 then the revenue is fall from $20 to $12.

In this range, the ratio of price and quantity is less than 1, i.e.,

pq=45=0.8<1pq=26=0.33<1

So, demand is inelastic here.

To determine

(c)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenueis maximum at p = $7 and elasticity at this price is equal to 1.

Explanation of Solution

Total revenue is maximized at the point where demand is unitary elastic.

When the percentage change in price is equal to the percentage change in quantity demanded, then the demand is unitary elastic.

At P = $7

Q = 3.5

Revenue = $24.5

When p = $7 and Q = 3.5, the elasticity is equal to 1.

εp=dQdP⋅PQ=12⋅73.5=1

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 3, Problem 1CACQ

To determine

(a)

The revenue at different price levels and check the elasticity at that price range.

Expert Solution

Answer to Problem 1CACQ

Revenue increases and demand is elastic in this range.

Explanation of Solution

If price is fall from $12 to $10,

When P = $12,

Revenue = P*Q

= $12*1

= $12

When P = $10

Revenue = $10*2 = $20

Therefore, if price is fall from $12 to $10 then the revenue is rises from $12 to $20.

In this range, the ratio of price and quantity is greater than 1, i.e.,

pq=121=12>1pq=102=5>1

So, demand is elastic here.

Economics Concept Introduction

Elasticity shows the responsiveness of quantity demanded due to the change in the price of a commodity. The change in revenue due to the change in price depends upon the elasticity of the demand curve.

If demand is elastic, an increase (decrease) in price will lead to a decrease (increase) in total revenue. If the demand is inelastic, an increase (decrease) in price will lead to an increase (decrease) in total revenue. Total revenue is maximized at the point where demand is unitary elastic.

To determine

(b)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenue is decreases here and demand is inelastic.

Explanation of Solution

If price is fall from $4 to $2

When P = $4,

Revenue = P*Q

= $4*5

= $20

When P = $2

Revenue = $2*6 = $12

Therefore, if price is fall from $4 to $2 then the revenue is fall from $20 to $12.

In this range, the ratio of price and quantity is less than 1, i.e.,

pq=45=0.8<1pq=26=0.33<1

So, demand is inelastic here.

To determine

(c)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenueis maximum at p = $7 and elasticity at this price is equal to 1.

Explanation of Solution

Total revenue is maximized at the point where demand is unitary elastic.

When the percentage change in price is equal to the percentage change in quantity demanded, then the demand is unitary elastic.

At P = $7

Q = 3.5

Revenue = $24.5

When p = $7 and Q = 3.5, the elasticity is equal to 1.

εp=dQdP⋅PQ=12⋅73.5=1

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 3, Problem 1CACQ

To determine

(a)

The revenue at different price levels and check the elasticity at that price range.

Expert Solution

Answer to Problem 1CACQ

Revenue increases and demand is elastic in this range.

Explanation of Solution

If price is fall from $12 to $10,

When P = $12,

Revenue = P*Q

= $12*1

= $12

When P = $10

Revenue = $10*2 = $20

Therefore, if price is fall from $12 to $10 then the revenue is rises from $12 to $20.

In this range, the ratio of price and quantity is greater than 1, i.e.,

pq=121=12>1pq=102=5>1

So, demand is elastic here.

Economics Concept Introduction

Elasticity shows the responsiveness of quantity demanded due to the change in the price of a commodity. The change in revenue due to the change in price depends upon the elasticity of the demand curve.

If demand is elastic, an increase (decrease) in price will lead to a decrease (increase) in total revenue. If the demand is inelastic, an increase (decrease) in price will lead to an increase (decrease) in total revenue. Total revenue is maximized at the point where demand is unitary elastic.

To determine

(b)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenue is decreases here and demand is inelastic.

Explanation of Solution

If price is fall from $4 to $2

When P = $4,

Revenue = P*Q

= $4*5

= $20

When P = $2

Revenue = $2*6 = $12

Therefore, if price is fall from $4 to $2 then the revenue is fall from $20 to $12.

In this range, the ratio of price and quantity is less than 1, i.e.,

pq=45=0.8<1pq=26=0.33<1

So, demand is inelastic here.

To determine

(c)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenueis maximum at p = $7 and elasticity at this price is equal to 1.

Explanation of Solution

Total revenue is maximized at the point where demand is unitary elastic.

When the percentage change in price is equal to the percentage change in quantity demanded, then the demand is unitary elastic.

At P = $7

Q = 3.5

Revenue = $24.5

When p = $7 and Q = 3.5, the elasticity is equal to 1.

εp=dQdP⋅PQ=12⋅73.5=1

Answer 6

Chapter 3, Problem 1CACQ

To determine

(a)

The revenue at different price levels and check the elasticity at that price range.

Expert Solution

Answer to Problem 1CACQ

Revenue increases and demand is elastic in this range.

Explanation of Solution

If price is fall from $12 to $10,

When P = $12,

Revenue = P*Q

= $12*1

= $12

When P = $10

Revenue = $10*2 = $20

Therefore, if price is fall from $12 to $10 then the revenue is rises from $12 to $20.

In this range, the ratio of price and quantity is greater than 1, i.e.,

pq=121=12>1pq=102=5>1

So, demand is elastic here.

Economics Concept Introduction

Elasticity shows the responsiveness of quantity demanded due to the change in the price of a commodity. The change in revenue due to the change in price depends upon the elasticity of the demand curve.

If demand is elastic, an increase (decrease) in price will lead to a decrease (increase) in total revenue. If the demand is inelastic, an increase (decrease) in price will lead to an increase (decrease) in total revenue. Total revenue is maximized at the point where demand is unitary elastic.

Answer 7

Chapter 3, Problem 1CACQ

To determine

(a)

The revenue at different price levels and check the elasticity at that price range.

Answer 8

Expert Solution

Answer to Problem 1CACQ

Revenue increases and demand is elastic in this range.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

If price is fall from $12 to $10,

When P = $12,

Revenue = P*Q

= $12*1

= $12

When P = $10

Revenue = $10*2 = $20

Therefore, if price is fall from $12 to $10 then the revenue is rises from $12 to $20.

In this range, the ratio of price and quantity is greater than 1, i.e.,

pq=121=12>1pq=102=5>1

So, demand is elastic here.

Answer 13

Economics Concept Introduction

Elasticity shows the responsiveness of quantity demanded due to the change in the price of a commodity. The change in revenue due to the change in price depends upon the elasticity of the demand curve.

If demand is elastic, an increase (decrease) in price will lead to a decrease (increase) in total revenue. If the demand is inelastic, an increase (decrease) in price will lead to an increase (decrease) in total revenue. Total revenue is maximized at the point where demand is unitary elastic.

Answer 14

To determine

(b)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenue is decreases here and demand is inelastic.

Explanation of Solution

If price is fall from $4 to $2

When P = $4,

Revenue = P*Q

= $4*5

= $20

When P = $2

Revenue = $2*6 = $12

Therefore, if price is fall from $4 to $2 then the revenue is fall from $20 to $12.

In this range, the ratio of price and quantity is less than 1, i.e.,

pq=45=0.8<1pq=26=0.33<1

So, demand is inelastic here.

Answer 15

To determine

(b)

Revenue and elasticity at given price level.

Answer 16

Expert Solution

Answer to Problem 1CACQ

Revenue is decreases here and demand is inelastic.

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

If price is fall from $4 to $2

When P = $4,

Revenue = P*Q

= $4*5

= $20

When P = $2

Revenue = $2*6 = $12

Therefore, if price is fall from $4 to $2 then the revenue is fall from $20 to $12.

In this range, the ratio of price and quantity is less than 1, i.e.,

pq=45=0.8<1pq=26=0.33<1

So, demand is inelastic here.

Answer 21

To determine

(c)

Revenue and elasticity at given price level.

Expert Solution

Answer to Problem 1CACQ

Revenueis maximum at p = $7 and elasticity at this price is equal to 1.

Explanation of Solution

Total revenue is maximized at the point where demand is unitary elastic.

When the percentage change in price is equal to the percentage change in quantity demanded, then the demand is unitary elastic.

At P = $7

Q = 3.5

Revenue = $24.5

When p = $7 and Q = 3.5, the elasticity is equal to 1.

εp=dQdP⋅PQ=12⋅73.5=1

Answer 22

To determine

(c)

Revenue and elasticity at given price level.

Answer 23

Expert Solution

Answer to Problem 1CACQ

Revenueis maximum at p = $7 and elasticity at this price is equal to 1.

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

Expert Solution

Answer 27

Explanation of Solution

Total revenue is maximized at the point where demand is unitary elastic.

When the percentage change in price is equal to the percentage change in quantity demanded, then the demand is unitary elastic.

At P = $7

Q = 3.5

Revenue = $24.5

When p = $7 and Q = 3.5, the elasticity is equal to 1.

εp=dQdP⋅PQ=12⋅73.5=1

Answer 28

Ch. 3 - Prob. 1CACQ Ch. 3 - The demand curve for a product is given by...Ch. 3 - Prob. 3CACQ Ch. 3 - Suppose the own price elasticity of demand for...Ch. 3 - Suppose the cross-price elasticity of demand...Ch. 3 - You are the manager of a firm that receives...Ch. 3 - A Quant jock from your firm used a linear demand...Ch. 3 - Prob. 8CACQ Ch. 3 - Prob. 9CACQ Ch. 3 - Prob. 10CACQ

(a) The revenue at different price levels and check the elasticity at that price range.

(a) The revenue at different price levels and check the elasticity at that price range.

Answer to Problem 1CACQ

Explanation of Solution

(b) Revenue and elasticity at given price level.

Answer to Problem 1CACQ

Explanation of Solution

(c) Revenue and elasticity at given price level.

Answer to Problem 1CACQ

Explanation of Solution

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Chapter 3 Solutions

(a)

The revenue at different price levels and check the elasticity at that price range.

(b)

Revenue and elasticity at given price level.

(c)

Revenue and elasticity at given price level.