Engineering Mangement and Entrepreneurship
A. Suppose you own a company that supplies vending machine. Currently , your
vending machine sells soft drinks at $1.50 per bottle. At that price, customer
purchase 2,000 bottles per week. In order to increase sales , you decide to
decrease the price to $1.00 and sales increases to 4,000 bottles. Calculate price
elasticity of demand.
B. Suppose the demand curve for a product is given by q=500-10p
i. Compute the price elasticity of this demand function.
ii. What is price elasticity of demand when the price is $30?
iii. What is the percentage change in demand if the price is $30 and increased
by 4.5%.
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