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A hot dog vendor faces a daily demand curve of P = 130 - .125Q, where P is the price of a hot dog in cents and Q is the number of hot dogs purchased each day.
a. If the vendor has been selling 400 hot dogs each day, how much revenue has he been collecting? Show your work.
b. What is the price elasticity of demand for hot dogs? Show your work.
c. The vendor decides that he wants to generate more revenue. Should he raise or lower the price of his hot dogs? Show your work.
d. At what price would he achieve maximum total revenue? Show your work.
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