Question

Q3 The demand schedule for gym subscriptions is in the table. Price (euros per gym subscription Quantity demanded (hundreds of gym subscriptions per year) a) What happens to total revenue if the price rises from (i) €230 to €280 per gym subscription and from (ii) €280 to €330 per gym subscription? b) At what price is total revenue at a maximum? c) At €230, is the demand for gym subscriptions elastic, inelastic, or unit elastic? Use the total revenue test to answer this question. d) At €330 a gym subscription, is the demand for gym subscriptions elastic or inelastic? Use the total revenue test to answer this question. 180 230 280 330 380 Price (dollars per sandwich) Quantity Quantity demanded supplied (sandwiches per hour) Q4. The table gives the demand and supply schedules for sandwiches. a) What is the maximum price that consumers are willing to pay for the 200th sandwich? b) What is the minimum price that producers are willing to accept for the 200th sandwich? c) If 200 sandwiches a day are available, what is the total surplus? 300 250 200 150 50 100 150 200 250 300 100 50 Price (dollars kilogram) per Quantity Quantity demanded supplied (kilograms per month) 4 120 Q5. The demand and supply schedules for salmon are a) If salmon is not taxed, what is the price and how many kilograms are bought? b) If salmon is taxed $3 a kilogram, what is the price and what is the quantity bought? Who pays the tax? 100 6 80

Answer 1

a) il price PF € 230 ; Q = 3000. Total Revenue = Pidi= 230.13000) = 690000 when pf = 62.00; d = 2500 Total Revenues ff df = 280 (2500 = 70 0000 Total Revenue nises from 690000 to 700ooo ii) Pi 4280'; \ = 2500 Total Revenue - Pili = 26 (2500)=4700000 Pf= 6330; df = 2000 Total Revenue - Pq Qq = 330/2000)=&660000 Total revenue falls when price rise 62 At price .280; the total Revenue is maximum Total Revenue =PQ = 280/8500)= $700000 1x mum

d] e) when we p changes from 230 to 280 we know revenue increases. . . Increase in price lead to increase in revenue So, demand is inelastic at p=230 when p changes from &3% to $200 (price) we know total revenue increase. fall in price has lead to increase in revenue. to, demand is elastic at p= € 330 20.45 al At Cuantity demand of too price is a. So, for 200th unit maximum price is 2. - 67 The price at cluantity supplied of 200 is y. 1. So, minimum price for 200th unit is yo 1. c) Loo sand whiches are available at price 4. on price of u auantity demanded is loo. So, surplus asado. [ surplus = 200 100 =100]