More peop|e start consuming mangoes because of its newly discovered health benefits. Assume in this...

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More peop|e start consuming mangoes because of its newly discovered health benefits. Assume in this case that the supply for mangoes remains unchanged' (6) Question 3 (20 marks) consider the information in the figure below and answer the questions that follow. The slope of the demand curve (AP/AQ is,'0,'* r. 4.\qstr() 4 '1" in cre=r.> tn A'rlzt For each of points'€l','b','c','d'and'e'on the graph' price elasticity of demand (PED) and state the nature of perfectly inelastic) at that point' '1" in -nT ^ P'-icP 100 QuantitY calculate the elasticitY (e XXXXXXXXXXrevenue from sales be (3) increase or a reason .for XXXXXXXXXXAt which of the specified prices will total maximised? Motivate your answer briefly' Suppose the price is equal to R10' Should the producer decrease the price in order to maximise revenue? Give your answer.
	
Document Preview: 2.3.2Morepeop|estartconsumingmangoesbecauseofitsnewly
that the supply
this case 
Assume in 
benefits. 
health 
discovered 
(6)
unchanged'
remains 
mangoes 
for 
3 (20 marks)
Questlon 
questions that
the 
answer 
below and 
the figure 
in 
the information 
consider 
(AP/AQ is,'0,'* r.
curve 
the demand 
slope of 
The 
follow. 
4
4.\qstr()
A'rlzt
tn 
cre=r.> 
'1" in 
P'-icP
'1" 
in 
^ 
-nT 
20
10
100 QuantitY
the
graph' calculate 
the 
points'€l','b','c','d'and'e'on 
each of 
For 
(e.9.
elasticitY 
the nature of
(PED) and state 
of demand 
price elasticity 
(15)
point'
at that 
perfectly inelastic) 
be
from sales 
revenue 
prices will total
specified 
of the 
At which 
(3)
your answer briefly'
Motivate 
maximised? 
or
producerincrease 
the 
to R10' Should 
price is equal 
the 
Suppose 
Givea reason 
revenue? 
maximise 
price in order to .for
the 
decrease 
(2)
your answer.
@MilparkBusinessSchool(Pty)LtdEconomicslABBAE1OlAAssignment'120'13
Page14 of 15

David · Accepted Answer

Question 3.1 
Price elasticity of Demand = % change in quantity demanded / % change in price 
At point a elasticity is equal to infinity, perfectly elastic 
At point b                                 2500/25    =   100, Elastic Demand 
At point c                                  100/3.

More peop|e start consuming mangoes because of its newly discovered health benefits. Assume in this case that the supply for mangoes remains unchanged' (6) Question 3 (20 marks) consider the...

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