Question

WORKSHEET 5 Below, you are provided with the dema calculate the price elasticity of demand as well as the total revenue associa a particular price increase leads to with the demand curve for tablet computers. You will City of demand at different points along this demand curve, evenue associated with each point. You will determine whether increase leads to an increase in total revenue, and you will relate your answers back the price elasticity of demand. 5700 $600 $300 $200 $100 Demand 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Quantity of Tablets Demanded Part 1: When the price of a tablet computer is $100, what is the quantity of tablets demanded? How much total revenue is generated? Part 2: When the price of a tablet computer is $200, what is the quantity of tablets demanded? How much total revenue is generated? Part 3: Between Point C and Point D, what is the price elasticity of demand? Use the midpoint formula, and round your answer to the nearest hundredth.

i have the answers for the first page the second page is what i need help with

Answer 1

To answer all the questions related to price and quantity, we can create the below table from the graph:

Price 100 2000 4000 6000 10000 12000 14000 8000 Quantity QD

Point	Price	QD	Revenue
	600	2000	1200000
A	500	4000	2000000
B	400	6000	2400000
	300	8000	2400000
C	200	10000	2000000
D	100	12000	1200000

Revenue = Price x quantity demanded

Midpoint formula is as follows:

$Elasticity = \frac{\frac{Q_{2}-Q_{1}}{\frac{Q_{2}+Q_{1}}{2}}}{\frac{P_{2}-P_{1}}{\frac{P_{2}+P_{1}}{2}}}$

$Elasticity_{C,D} = \frac{\frac{10000-8000}{\frac{10000+8000}{2}}}{\frac{100-200}{\frac{100+200}{2}}}$

Elasticityc.p = -0.33

$Elasticity_{A,B} = \frac{\frac{4000-2000}{\frac{4000+2000}{2}}}{\frac{400-500}{\frac{400+500}{2}}}$

Part 7) Demand is elastic when the absolute value of elasticity > 1 and it is inelastic when the absolute value of elasticity < 1 It is unit elastic when elasticity = 1

So if the price change> Quantity change, then the demand is inelastic so an increase in price leads to an overall increase in revenue as we can see if the price increases from 200 to 300, the quantity changes from 10000 to 8000 but the revenue increases from 2000000 to 2400000

Part 8)

So if the price change< Quantity change, then the demand is elastic so an increase in price leads to an overall decrease in revenue as we can see if the price increases from 400 to 500, the quantity changes from 6000 to 4000 and the revenue falls from 2400000 to 2000000

Part 9)

So if the price change< Quantity change, then the demand is elastic so a decrease in price leads to an overall increase in revenue as we can see if the price increases from 500 to 400, the quantity changes from 4000 to 6000 and the revenue rises from 2000000 to 2400000