5. The demand is given by Q^d = 80 - 2P. Create a table which you...
5. The demand is given by Q^d = 80 - 2P. Create a table which you calculate the quantity demanded, revenue and elasticity at prices per unit of $0, $10, $20, $30, and $40.
explain.
Homework Answers
Qd = 80 - 2P
Revenue = Price * Quantity
Elasticity of demand = %change in quantity demanded / %change in price
Elasticity between 0 and 1 is inelastic demand
Elasticity greater than 1 is elastic demand
Elasticity equals to 1 is unitary elastic demand
| Qd | P | Revenue | % change in Quantity | %change in Price | Elasticity (Ignoring Negative Sign) | |
| 80 | 0 | 0 | - | - | ||
| 60 | 10 | 600 | -25.00% | #DIV/0! | ||
| 40 | 20 | 800 | -33.33% | 100.00% | 0.33 | Inelastic |
| 20 | 30 | 600 | -50.00% | 50.00% | 1.00 | Unit |
| 0 | 40 | 0 | -100.00% | 33.33% | 3.00 | Elastic |
We ignore negative sign of elasticity due to negative relationship between price and quantity demanded.
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