. For the following demand function, QD = 100 – P, answer the following questions a....

. For the following demand function, QD = 100 – P, answer the following questions a. what is the point elasticity of demand at P = 80? b. what is the point elasticity of demand at P = 20? c. at what price is demand unitary price elastic? d. demand is price elastic for prices between __________ and ___________ e. Consider your answer to part d., what happens to revenues as prices decrease within this range? Are marginal revenues positive, constant or negative in this range of prices? f. demand is price inelastic for prices between __________ and ___________ g. Consider your answer to part f., what happens to revenues as prices decrease within this range? Are marginal revenues positive, constant or negative in this range of prices? h. How many units of this good does a firm facing this demand curve have to produce to maximize its revenues? i. What are maximum revenues for this firm? j. Draw the total revenue curve associated to this demand curve. Need help with H-J

Solutions

Expert Solution

QD = 100 - P

P = 100 - QD

(h)

Total revenue (TR) = P x QD = 100QD - QD²

Revenue is maximized when dTR/dQD = 0.

dTR/dQD = 100 - 2QD = 0

2QD = 100

QD = 50

(i)

When QD = 50, P = 100 - 50 = 50

Revenue = 50 x 50 = 2500

(j)

Data table used for graph:

QD	P	TR
0	100	0
10	90	900
20	80	1600
30	70	2100
40	60	2400
50	50	2500
60	40	2400
70	30	2100
80	20	1600
90	10	900
100	0	0

Graph:

Rahul Sunny answered 1 year ago

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