Question

a. High Wire Electronics determines the following demand function for a new game: 9 = D(x) = V200 – x3. Where q is the number of games sold per day when the price is x dollars per game. Find the elasticity of demand. b. At what prices is elasticity of demand inelastic? Find the elasticity when price is $3. Interpret your result. d. At what price is revenue a maximum? e. What's the maximum revenue? c.

Answer 1

6 demand is in elastic if ECA LI 323 » < 21200 -23) --) 373 a(2003) =) 323 an3 = 5x3 ->) < (8093 < 100 <400 - 3 < so de 4.30887 to find the elasticity at x = 3, put = 3 in Elm). = E(3) = 3(27) ñ 0.234 El 2 (200-27) There efore , the elasticity is 0.234 and the demand is inelastic.

is ->) 37,3 @ if the demand has unit has unit elasticity then the revenue maximized, to find the price at the Revenue is maximum, equate elasticity ECA) to one. 31 Ein) = 1 =1 2 (200-23) = 460 - 80 x = 2110) da 2 (10%) ñ 4. 209 Therefore the total es evenue is maximum at -) =) 5n3 (80)'s =) 4.309. Maxim Revenue =Rcm = x D (A) = x 200 so Revenue maximum = mano Revenue ñ 47.2013 (4.309) 200 - (4.3093
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