Business, 15.04.2020 19:53, tracijp

Assume that the price of a product increases from $9.50 to $10.50 and this causes the quantity demanded to drop from 2,050 units to 1,950 units.

A. calculate the total revenue at each price level.
B. calculate the price elasticity of demand between these two points.
C. Is this demand elastic or inelastic?

Answers: 3

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answered: krab38

Total revenue at a price of $9.5 per unit is $19475 while the total revenue at a price of $10.5 per unit is $20475

The PED is -0.46

The demand for the product is price inelastic as the PED (0.46) is less than 1.

Explanation:

Total revenue is a function of price multiplied by quantity.

Total revenue at price $9.5 = 9.5 * 2050 = $19475

Total Revenue at price $10.5 = 10.5 * 1950 = $20475

The price elasticity of demand measures the responsiveness of quantity demanded to changes in price. Price elasticity of demand (PED) can be calculated using the following formula,

PED = % Change in Quantity demanded / % Change in price

PED = [ (1950 - 2050) / 2050 ] / [ (10.50 - 9.50) / 9.50 ]

PED = -0.46

The negative sign represents the normal (inverse) relationship between price and quantity demanded.

The demand for a good is price inelastic when its PED is less than 1 while the demand for a product is price elastic when its PED is more than 1.

As the product's PED is 0.46 which is less than 1, the demand for the product is price inelastic.

answered: Guest

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answered: Guest

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.

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Assume that the price of a product increases from $9.50 to $10.50 and this causes the quantity deman...