# Demand Elasticity Consultants

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1. A consultant estimates the price-quantity relationship for New World Pizza to be

P=50-5Q.

a. At what output rate is demand unitary elastic?

b. Over what range of output is demand elastic?

c. At the current price, 8 units are demanded each period. If the objective is to increase total revenue, should the price be increased or decreased? Explain.

https://brainmass.com/economics/elasticity/demand-elasticity-consultants-124821

#### Solution Preview

Answer (a):

P=50 - 5Q

=> Q = 10 - 0.2P

The slope is 0.2. Thus for unitary elasticity:

1 = 0.2x(P/Q)

=>P/Q = 5

=> P = 5Q

Substituting this above ...

#### Solution Summary

The solution answers a lot of questions about the demand elasticity. The output rate for demand unitary elastics are analyzed.

$2.49