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Calculating Arc elasticity, Total Revenue & Marginal Revenue

Given the following demand function:

PriceP$ Quantity,QD(Pounds of steak) Arc Elasticity, ED Total Revenue Marginal Revenue
12 30 n.a n.a
11 40
10 50
9 60
8 70
7 80
6 90
5 100
4 110

a)Compute the associated arc elasticity, total revenue, and marginal revenue values.

b)On a separate graphs, plot the demand function, total revenue function, and marginal revenue function.

Solution Preview

Please refer attached file for better clarity of formulas and tables. Graphs are missing here.

Solution:

a)Compute the associated arc elasticity, total revenue, and marginal revenue values.

Arc Elasticity is given by

Ed=

Price P Quantity Qd Arc Elasticity Ed Total Revenue ...

Solution Summary

Solution describes the steps to find out arc elasticity, total revenue and marginal revenue. Desired Curves are plotted with the help of MS Excel.

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