Homework Answers
a) When P=10
Q = 120-4*10 = 80
Elasticity = -4*10/80 = -0.5
b) TR is maximized when MR =0
MR is twice the slope of the demand curve
Inverse demand curve = P =30-0.25Q
MR = 30-0.5Q
30-0.5Q = 0
Q = 30/0.5 = 60
P = 30-0.25*60 = 15
c) When P =12
Q = 120-12*4 = 72
MR = 30-0.5*72 = -6
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