Question

Calculate the daily total revenue when the market price is $80, $70, $60, $50, $40, $30, $20, and $10 per bippitybop. Then, use the green point (triangle symbol) to plot the daily total revenue against quantity corresponding to these market prices on the following graph 1140 1045 950 855+ 760 665 570 475 380 285 190 95 Total Revenue 0 612 18 24 30 36 42 48 54 60 QUANTITY (Bippitybops per day) According to the midpoints formula, the price elasticity of demand between points A and B on the initial graph is approximately Suppose the price of bippitybops is currently $50 per bippitybop, shown as point A on the initial graph. Because the price elasticity of demand between points A and B is ,a $10-per-bippitybop decrease in price will lead to in total revenue per day In general, in order for a price increase to cause a decrease in total revenue, demand must boe

Answer 1

Plot combinations of quantity & total revenue to get total revenue curve At point A: P_1 = 50 & Q_1 = 18 At point B: P_2 = 40 & Q_2 = 24 elasticity = Q_2 - Q_1/(Q_1 + Q_2)/2/P_2 - P_1/(P_1 + P_2)/2 \r\n e_a = 24 - 18/(24 + 18)/2/40 - 50/(40 + 50)/2 = 6/21/-10/45 = -1.285 Price elasticity between A & B is approximately -1.28 Price elasticity between A & B is elastic, a $ 10 - per bippitybop decrease in price will lead to increase in total revenue. In general, in order for a price increase to cause decrease in total revenue, demand must be elastic.