Calculating total revenue and price elasticity of demand
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Table. Price Elasticity of Demand and Revenue
Fine 0 10 20 30 40 50
Number of Tickets 0 8 7 6 4 2
Total Revenue
a.Plot the demand curve i.e., Qd = F (p)
b.Use the data in Table IV to find the total revenue for each fine.
SHOW the formula for total revenue.
c.Draw a graph of the relationship between Fines and Revenues [R = f(F)].
d.What does the graph show about the inelastic and elastic portions of the demand curve for tickets.
e.How is the graph in part (c) above as an example of a Laffer Curve.
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Solution describes the steps to find out total revenue and price elasticity of demand.
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Solution:
a. Plot the demand curve i.e., Qd = F (p)
Fine 0 10 20 30 40 50
Number of Tickets 0 8 7 6 4 2
b.Use the data in Table IV to ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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