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    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.

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    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.

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