Question

2. The schedule below shows the number of packs of bagels bought in Davis, California, each day at a variety of prices. Price of Bagels ($/pack) Number of packs purchased per day 0 $5 3,000 $4 6,000 $3 9,000 12,000 15,000 18,000 $2 $1 $0 a. Graph the daily demand curve for packs of bagels in Davis. b. Calculate the price elasticity of demand at the point on the demand curve at which the price of bagels is $3 per pack. c. If all bagel shops increased the price of bagels from $3 per pack to $4 per pack, what would happen to total revenues? d. Calculate the price elasticity of demand at a point on the demand curve where the price of bagels is $2 per pack. e. If bagel shops increased the price of bagels from $2 per pack to $3 per pack, what would happen to total revenues?

Answer 1

Given,

The table below,

Price ($/pack) Quantity (packs/day) 0 3,000 6,000 O ANWA 9,000 12,000 15,000 18,000

To find:

​​​​​​

the daily demand in Davis cuate or Packs a Graph bagels Solution of ه ها م ن ه ا (price) p) ل ن م demand curre r . + - 3000 6000 9000 12000 15000 18000 21000 24000 Guantilly (ruumber of places) b) Calculate the price elasticity of demand at the - point on the demand curve at which the price - of bagels is $3 Per Pack Here, paire (P) Guantity (Q) 6000 3000 TAP= $1 A9 2-3000 Hence, price elasticity of demand = 40 x 5

- - 3000 x4 I 6000 = - 18000 x 4 6000 5-72000 6000 =- 12 Hence, the price elasticity demand is =12 C) If all bagel shops increased the price of bagels From $3 per pack to $4 per pack, what would happen to total revenues? Solmion : 83 $4 Price Guantity Total devenues gooo $ 27000 6000 $ 24000 ATR = $24000-$24000 ATR = $ 24000 - $ 27000 ATR = - 3000 Henie, canen poire increase from $3 to $4, Total devenues falls by $3000 o calculate the price elasticity of demand at a point " on the demand curve where the price of bagels is $2 Per Pack?

Solution AP price Guantity 15000 $2 12000 AP = $1 DQ 3-3000 The police elasticity of demanda de =-3000-YJ5000 =-3000X15000+ 1x 15000 2.45000 75000 = -0.2012 Therefore the price elasticity of demand is 0.20 C) IP bagel shops increased the poice of bagels from $2 per pack to $3 per pack, what would happen to toted revenues Solution price (P) Guantity (Q) Total gevenue (TR) 15,000 $ 19000 43 42,000 $ 9000 OTR = $29000-$18000 ATR = $90007 Therefore total revenue increased $9000