Question

Fill in the blanks:

Consider the following data for a demand cuve.

Price	Quanity Demanded
$3	80
$4	70
$5	60
$6	50
$7	40
$8	30
$9	20
$10	10

Fill in the blanks for the following statements using midpoint formula.

Between a price of $4 and $5, the price elasticy of demand is ______ (round to one decimal point) and at that point the demand elasticity is ______.

Between a price of $8 and $9 the price elasticity of demand is ______ (round to one decimal point) and at that point the demand elasticity is ______.

Revenue is maximized when the price is at $_____ and the demand elasticity equals ______

Answer 1

Between a price of $4 and $5, the price elasticity of demand =
and at that point the demand elasticity is inelastic.

Between a price of $8 and $9 the price elasticity of demand =
and at that point the demand elasticity is elastic.

Revenue is maximized when the price is at $__6___ and the demand elasticity equals __-1____
(At $6, revenue = price*quantity = 6*50 = $300 is the maximum revenue and when revenue is maximum, elasticity = -1.)