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    Price Elasticity Calculations

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    Demand for a managerial economics text is given by Q=20,000-300P. The book is initially priced at $30.00.
    a. Compute the point price elasticity of demand at P=$30
    b. If the objective is to increase total revenue, should the price be increased or decreased? Explain.
    c. Compute the arc price elasticity for a price decrease from $30 to $20.
    d. Compute the arc price elasticity of a price decrease from $20 to $15.

    Write the demand equation for which the price elasticity of demand is zero for all prices.

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    https://brainmass.com/economics/demand-supply/price-elasticity-calculations-124718

    Solution Preview

    Answer (a):
    At P = 30,
    Q = 20,000 - 300x30 = 11,000
    Elasticity = -300x(30/11,000) = -0.8181

    Answer (b):
    The demand in inelastic. So to increase total revenue, the ...

    Solution Summary

    The question determines the demand equation for which the price elasticity of demand is zero for all prices.

    $2.19