Question

In: Economics

Based on the information below please: Calculate TR for each price level At every price level...

Based on the information below please:

Calculate TR for each price level

At every price level compare TR thus you will calculate the change in TR as the price drops.

In which price range is your demand elastic

In which price range is your demand unit elastic

In which price range is your demand inelastic

Explain how you can assess that in a particular price range the demand is elastic, unit elastic or inelastic.

Price Quantity TR

10 1

9 2

8 3

7    4

6 5

5    6

4 7

3    8

2 9

Solutions

Expert Solution

Price Quantity

TR (P*Q
10 1 10
9 2 18
8 3 24
7 4 28
6 5 30
5 6 30
4 7 28
3 8 24
2 9 18

Elasticity = %Change b/w price and quantity

price change 10 to 9 is 0.11% whereas TR change 0.44 % i.e elastic

price change 9 to 8 is 0.11125% whereas TR change 0.25 % i.e elastic

price change 8 to 7 is 0.14% whereas TR change 0.14 % i.e Unitryelastic

price change 7 to 6 is 0.16 % whereas TR change 0.06 % i.e inelastic

from this point to till end it is inelastic

Rahul Sunny answered 1 month ago
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