Question

In this problem, p is in dollars and q is the number of units. (a) Find the elasticity of the demand function 2p + 39 = 216 at the price p = 12. (b) How will a price increase affect total revenue? O Since the demand is elastic, an increase in price will decrease the total revenue. O Since the demand is unitary, there will be no change in the revenue with a price increase. Since the demand is elastic, an increase in price will increase the total revenue. O Since the demand is inelastic, an increase in price will increase the total revenue. O Since the demand is inelastic, an increase in price will decrease the total revenue.

Answer 1

Given demand 20+39=216 39= 2)6-2p q= 216-2p (demand) a = 1 1 2 [216-28) as Elastraty of demand (E)= der f . - deye bip [ $ (216-28]] (0-201) = -2 Elasticity of demand ct) - 112 x P ] - 2P 216-2P Elastity at pare p=12. of demand (E)=52P 1216-28 P= 12 - 2 ( R ) 216 - 2012) = = 8 f = 0.125 Elasticity of demand a price 2 is 10.125 J b) If OCELI El ECOO Here demand demand demand E=(0.125 anelastic unitary elastic ie OLE <1 in ie, inelastic

Here, > As the derhand as inelastic. demand as an inelastic, then an increase in price increase in the revenue. ophon @ as corred anelastic, an increase in prece O since the demand is will increase the total revenue.