5. Elasticity and total revenue The following graph shows the dally demand curve for bikes in Miami. Use the green rectangle (triangle symbols) to compute total revenue at vanious prices along the demand curve. Note: You will not be graded on any changes made to this graph. 300 275 250 Total Revenue 225 200 夏175 100 125 100 75 60 25 Demand 5 10 15 20 25 30 35 40 45 50 55 60 QUANTITY (Bikas) On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $50, $75, $100, $125, $150, $175, and $200 per bike. 5300 4000 Total Revenue 4500 400 w 3700 2300 2900 2500 200 1700 O 25 se 75 100 125 150 175 20o 225 250 275 300 PRICE (Dollars per bike) According to the midpoint method, the price elasticity of demand between points A and B is approximately . Suppose the price of bikes is currently $100 per bike, shown as point B on the initial graph. Because the demand between points A and B is va $25-per-bike increase in price will lead to in total revenue per day. In general, in order for a price decrease to cause a decrease in total revenue, demand must be TOTAL REVENUE (Dollars) PRICE (Dolars per bike)
5. Elasticity and total revenue The following graph shows the dally demand curve for bikes in Miami. Use the green rectangle (triangle symbols) to compute total revenue at vanious prices along the demand curve. Note: You will not be graded on any changes made to this graph. 300 275 250 Total Revenue 225 200 夏175 100 125 100 75 60 25 Demand 5 10 15 20 25 30 35 40 45 50 55 60 QUANTITY (Bikas) On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $50, $75, $100, $125, $150, $175, and $200 per bike. 5300 4000 Total Revenue 4500 400 w 3700 2300 2900 2500 200 1700 O 25 se 75 100 125 150 175 20o 225 250 275 300 PRICE (Dollars per bike) According to the midpoint method, the price elasticity of demand between points A and B is approximately . Suppose the price of bikes is currently $100 per bike, shown as point B on the initial graph. Because the demand between points A and B is va $25-per-bike increase in price will lead to in total revenue per day. In general, in order for a price decrease to cause a decrease in total revenue, demand must be TOTAL REVENUE (Dollars) PRICE (Dolars per bike)
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
Problem 6CQQ: Over time, technological advance increases consumers incomes and reduces the price of smartphones....
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