Question

In: Accounting

According to the midpoint method, the price elasticity of demand between points A and B is approximately _______ .

 6. Elasticity and total revenue

 The following graph shows the daily demand curve for bikes in San Diego.

 Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph.

image.png

 On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $30, $45, $60, $75, $90, $105, and $120 per bike.

image.png

 According to the midpoint method, the price elasticity of demand between points A and B is approximately _______ .

 Suppose the price of bikes is currently $30 per bike, shown as point B on the initial graph. Because the demand between points A and B is _______ , a $15-per-bike increase in price will lead to _______ 

 in total revenue per day.

 In general, in order for a price decrease to cause a decrease in total revenue, demand must be _______ .

Solutions

Expert Solution

Market Price( Given) Demand (Quantity of Bikes) Annual Income
30 24 $         720.00
45 21 $         945.00
60 18 $      1,080.00
75 15 $      1,125.00
90 12 $      1,080.00
105 9 $         945.00
120 6 $         720.00

Calculation of Elasticity of Demand Using Mid Point Method =  

ekkarill92 answered 2 years ago
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