Elasticity have the expected value

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Reference no: EM1322712

Q. "Assume your company sells unique cell phone cases also that demand is Q1 = 20 - 0.5P1.

a. Utilize calculus to find out the level of output that maximizes total revenue. Illustrate what price would you have to sell the cases to reach this level of output? Elucidate how much total revenue would be earned?

b. Compute the point elasticity of demand at this TR-maximizing price also quantity. Does the elasticity have the expected value? Explain.

c. Now assume that demand conditions have changed such that Q2 = 25 - (1/1.2)P2. Elucidate how much revenue would you earn if you continued selling the same quantity as you did in part a? Compute the point elasticity when using your part a Q; should your company raise or lower its current selling price to maximize total revenue as a result of the new demand conditions?

d. Utilize calculus to conclude the TR-max level of output, price also TR (as you did in part a).

e. Using the 2 equations for demand, conclude equations for MR as a function of Q. Make 2 graphs, one of P also MR for the Q1 = 20 - 0.5P1 demand also one of P also MR for the Q2 = 25 - (1/1.2)P2 demand. Do the graphs confirm your earlier answers? Why or why not?

Reference no: EM1322712

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