Question

a) Complete the table above. 

b) What single price should the firm charge everyone if it wants to maximize its total sales revenue and what will be its total revenue. 

c) Suppose that the government of Mt. Pleasant allows the firm to price discriminate on the basis of political affiliation. If the firm wishes to maximize its total sales revenue. how much should it charge each group and what will be its total revenue? 

 d) What is the price elasticity of demand for these three groups between the prices of $5.10 and $4.50? Round your answers to 2 decimal places.

 Liberal:

 Conservative price:

 NDP:

 e) What is the relationship between elasticity and the prices charged?

 The greater the elasticity, the _______  the price charged.

Answer 1

Price	Liberal Q	Total revenue	conservative Q	Total revenue	NDP Q	Total revenue	Sum
5.1	2	10.2	6	30.6	10	51	91.8
4.5	4	18	8	36	12	54	108
3.9	6	23.4	10	39	14	54.6	117
3.3	8	26.4	12	39.6	16	52.8	118.8
2.7	10	27	14	37.8	18	48.6	113.4
2.1	12	25.2	16	33.6	20	42	100.8

A) single price = 3.3

Total revenue= 118.8

b) price discrimination

liberals : 2.7

Conservative: 3.3

NDP : 3.9

Total revenue : 27 + 39.6+54.6

= 121.2

D) ​​​​​​ using midpoint elasticity formula

e = (Q2-Q1)*(P2+P1)/(Q2+Q2)*(P2- P1)

P2 = 5.1 , P1 = 4.5

P1+P2 = 9.6

P2 - P1 = .6

For liberal. e = (2)*9.6/6*.6

= -5.33

for conservative , e = 2*9.6/14*.6

= -2.28

forNDP , e = 2*9.6/22*.6

= -1.45

Mandatorarily Answering only first four parts