17 Jul How much would the firm’s revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this range?
Answer the following questions based on the accompanying diagram:
The horizontal axis labeled quantity, ranges from 0 to 7 in increments of 1. The vertical axis labeled price in dollars, ranges from 0 to 20 in increments of 2. A line labeled D enters the quadrant through the point (0, 14) goes down to the right and exits the bottom right of the quadrant through the point (0, 7).
Instructions: All dollar responses should be entered as whole numbers. Include a minus (−) sign for all negative answers.
a. How much would the firm’s revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this range?
Revenue change: $ _____
Demand is ____________ in this range.
b. How much would the firm’s revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this range?
Revenue change: $ ______
Demand is ____________ in this range.
c. What price maximizes the firm’s total revenues? What is the elasticity of demand at this point on the demand curve?
Price that maximizes total revenues: $ ______
Demand is __________________ at this point.
Image transcription text
Price (S) 20 18 16 14 12 10 8 6 2 2 4 5 6 Quantity Instructions: All dollar responses should be entered as whole numbers. Include a minus (-) sign for all negative answers. a. How much would the firm’s revenue change if it lowered price from $12 to $10? Is demand elastic or inelastic in this range? Revenue change: $ Demand is (Click to select) | in this range. b. How much would the firm’s revenue change if it lowered price from $4 to $2? Is demand elastic or inelastic in this range? Revenue change: $ Demand is (Click to select) | in this range. c. What price maximizes the firm’s total revenues? What is the elasticity of demand at this point on the demand curve? Price that maximizes total revenues: $[ Demand is (Click to select) |at this point.
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