Question

6. Elasticity and total revenue

The following graph shows the daily demand curve for bikes in Dallas.

Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.

Note: You will not be graded on any changes made to this graph.

On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $ 50, $ 75, $ 100, $ 125, $ 150, $ 175, and $ 200 per bike.

According to the midpoint method, the price elasticity of demand between points A and B is approximately

Suppose the price of bikes is currently $ 25 per bike, shown as point B on the initial graph. Because the demand between points A and B is ∇, a $ 25-per-bike increase in price will lead to in total revenue per day.

In general, in order for a price decrease to cause a decrease in total revenue, demand must be

Answer 1