Asked by Robert
Elasticity
a) Find the elasticity of the demand function q + 2p = 5000 when p = $1000, and q = 3000.
b) How would revenue be affected by a price increase?
a) Find the elasticity of the demand function q + 2p = 5000 when p = $1000, and q = 3000.
b) How would revenue be affected by a price increase?
Answers
Answered by
bobpursley
dq/dp=-2
E= p/q * dq/dp= 1/3 * -2=-2/3
so if you increased prices, demand decreases.
E= p/q * dq/dp= 1/3 * -2=-2/3
so if you increased prices, demand decreases.