P (price) 10 8 7 6 5 4 3 2 1 0
Q (output) 0 50 75 100 125 150 175 200 225 250
TR (Total Revenue) 0 400 525 600 625 600 525 400 225 0
MR (Marginal Revenue) - 8 5 3 1 -1 -3 -5 -7 -9
EP (Price Elasticity) ? ? ? ? ? ? ? ? ? ?
Complete the table, if demand function is Q = 250 – 25P .
Questions:
a. Describe the relationship between demand, TR, MR and price elasticity!
b. At what price the demand is inelastic, elastic, & unitary?
c. When demand is elastic and inelastic, should the price be lowered or should it be increased? Prove it with the numbers from the table.