Demand for chips elastic, Microeconomics

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The demand schedule for computer chips is given in the table.

Price (dollars per chip)

Quantity demanded(millions of chips per year)

200

50

250

45

300

40

350

35

400

30

a. What happens to total revenue if the price falls from $400 to $350 a chip?

b. What happens to total revenue if the price falls from $350 to $300 a chip?

c. At what price is total revenue at a maximum?

d. At an average price of $350, is the demand for chips elastic, inelastic, or unit elastic? Use the total revenue test to answer this question.

 

 


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