Week 4 homework XXXXXXXXXXECO 105 XXXXXXXXXXDue date: 4/23/20211) In the following demand curve,...

Question

Week 4 homework XXXXXXXXXXECO 105 XXXXXXXXXXDue date: 4/23/2021
1) In the following demand curve, use the midpoint method and calculate the price elasticity
a) Between price of $70 and $80.
) Between prices of $40 and $50.
2) Now calculate the revenue for the sellers of this product if the price is
a) 70 Dollars.
) 50 Dollars.
3) Which one of the above prices ($50 or $70) will give the sellers more revenue? Can you explain the reason based on the elasticities?

week-4-homework-nwxpr02o.docx

Komalavalli · Accepted Answer

Week 4 homework                     ECO 105                      Due date: 4/23/2021
1) In the following demand curve, usethemidpointmethod and calculate the price elasticity 
a) Between price of $70 and $80.
b) Betweenpricesof$40and$50.
Midpoint method for price elasticity = [(Q2-Q1)/(Q2+Q1)]/[(P2-P1)/(P2+P1)]
a)
P1 = 70, P2 = 80, Q1= 15, Q2 =10
Q2 – Q1 = -5
Q2+Q1 = 25
P2-P1 = 10
P2+P1 = 150
Price elasticity =[ -5/25]/[10/150]
Price elasticity = [ -1/5]/[1/15]
Price elasticity = -3
b)
P1 = 40, P2 = 50, Q1= 30,

1) In the following demand curve, use the midpoint method and calculate the price elasticity a) Between price of $70 and $80. b) Between prices of $40 and $50. 2) Now calculate the revenue for...

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