For the demand function q D(p-450-p. find the following. a) The elasticity b) Th

Question

For the demand function q D(p-450-p. find the following. a) The elasticity b) The elasticity at p 118, stating whether the demand is elastic, inelastic or has unit elasticity c) The value(s) of p for which total revenue is a maximum (assume that p is in dollars) a) Find the equation for elasticity. E(p)- b) Find the elasticity at the given price, stating whether the demand is elastic, inelastic or has unit elast E(118)-? (Simplify your answer. Type an integer or a fraction.) Is the demand elastic, inelastic, or does it have unit elasticity? O inelastic O elastic O unit elasticity c) Find the valuels) of p for which total revenue is a maximum (assume that p is in dollars) Round to the nearest cent. Use a comma to separate answers as neoded.) Click to select your answer(s). Your to search

Explanation / Answer

a)

given q=D(p)=450-p

=>dq/dp=0-1

=>dq/dp=-1

elasticity ,E(p)=(dq/dp)*(p/q)

=>E(p)=(-1)*(p/(450-p))

=>E(p)=(-p/(450-p))

b)

E(118)=(-118/(450-118))

=>E(118)=(-59/166)

|E(118)|=(59/166)<1. so the demand is inelastic

c)

for 0<=p<=450 ,|E(p)|=(p/(450-p))

revenue is maximum when |E(p)|=1 ,

=>(p/(450-p))=1

=>p=450-p

=>2p=450

=>p=225.00

total revenue is maximum when p is 225.00 dollars

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