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2. Elasticity (related to Total Revenue): (Please show your steps & decision rules) The demand schedule...

2. Elasticity (related to Total Revenue): (Please show your steps & decision rules)

The demand schedule for a specific computer software is as follows

Price (per copy of software)

Quantity demanded (in million)

525

68

550

64

590

62

612

60

680

55

750

48

900

43

935

40

1010

37
  1. What type of elasticity (elastic, inelastic, or others) is this demand if the price of this software increase from $935 to $612? explain why and show your steps.
  2. What type of elasticity (elastic, inelastic or others) is this demand if the price of this software increases from $525 to $900? explain why and show your steps.
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Answer #1

Sinice, Pore elasticity of demand (122) is given by:- derraad to charge in quantity .)-charge in price PED 92-9 Cli & When prWhen frie increase from $525 to $yeo then 9,= 68 22:43 So peo= 43.68 526-525 TPEO = -0.514 Snice, PED lies between olo o to 1

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