Question

6. Consider the following linear demand function Using the quadratic formula determine: P = 24-40 a. At what quantities TR = 0. b. Maximum TR C. The range of price and quantities where the price elasticity of demand is clastic, unit elastic, and inelastic.

Answer 1

@ Total Revenciee TR s Brico x des e x Oecantity I Given p= 24-40 TR EPS TR = (24-48) = 248 -482 When TR=0 240-40²=0 . 40²-240=0 By Weing Quadeatic formala Q = 24+ √ 24 ²0 2 24724 8 Q=0; 8=6 TR=0 when the qualities " Q20 or 0=6 ③ When TR is maximum, /26 (TR) TO . and d² (TR) LO de TR)20 5) 24-8820 _ 033 Ge) --820 TR is maximum when 8=3 maximum TR=24 (3) ~4 (3) ²=360 dot

© price. Elasticity of demand dp : when Els the classic is good TELLI the Inclasticis good (ELFL the good is o unit clastic p=24-40 differentiating with gespeck to p we get 1--4d8 = d& 2-114 Daile etablece price elasticity of demare 40) (1) intermes . ff 224-8) په (9) if the good is classic = /6/21 76-87 or p t P312 6-oso P 043 / P-24

(el 2 If the good is unit elastic 6-ai alat 012 LAP I. 6-8=Q. or p=24-P =) 0234 12_ of the good is inelastic Telel 6-acl of IP/p_24/ 21 , Pट२५-p Q>3 or PC12 6-a ca ar pel2 1 . demande therefore the price elasticity of (i classic When OLQc3 or Pria (i) unit classic when Q=3 or P212 ( 2 Griclassic when 'B>3.0 oz 2412