4. The inverse demand function for a certain product is given by p= 5-0.1q, where p denotes the unit price of the product and q denotes the amount demanded. a. Find the revenue r as a function of demand q. b. Find the marginal revenue when q = 5. c. Describe the economic meaning of your answer to b. Suppose now that the unit price is currently p= 3. d. Find the current point elasticity of demand and determine whether demand is (perfectly) inelastic, (perfectly) elastic or has unit elasticity at the current price level. e. Suppose the current price increases slightly. Do you expect the revenue to increase or decrease? Explain. f. Suppose the price increases from p=3 to p=3.06. Estimate the (absolute) change in revenue. g. Now compute the exact change in revenue for a price increase from p=3 to p=3.06.
4. The inverse demand function for a certain product is given by p= 5-0.1q, where p denotes the unit price of the product and q denotes the amount demanded. a. Find the revenue r as a function of demand q. b. Find the marginal revenue when q = 5. c. Describe the economic meaning of your answer to b. Suppose now that the unit price is currently p= 3. d. Find the current point elasticity of demand and determine whether demand is (perfectly) inelastic, (perfectly) elastic or has unit elasticity at the current price level. e. Suppose the current price increases slightly. Do you expect the revenue to increase or decrease? Explain. f. Suppose the price increases from p=3 to p=3.06. Estimate the (absolute) change in revenue. g. Now compute the exact change in revenue for a price increase from p=3 to p=3.06.
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.3P: (Categories of Price Elasticity of Demand) For each of the following absolute values of price...
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can u solve point d to g
Suppose now that the unit price is currently p= 3.
d. Find the current point
e. Suppose the current price increases slightly. Do you expect the revenue to increase or decrease? Explain.
f. Suppose the price increases from p=3 to p=3.06. Estimate the (absolute) change in revenue.
g. Now compute the exact change in revenue for a price increase from p=3 to p=3.06.
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