Intermediate Microeconomics · free preview
Market Demand, Elasticity, and Revenue
Market demand sums individual demands horizontally, elasticity is the percentage response of quantity to price, and revenue rises in the inelastic range and falls in the elastic one, marginal revenue P times one plus one over e.
1. Summing the consumers
Summing the consumers
2. Elasticity
Elasticity
3. Revenue and its marginal twin
Revenue and its marginal twin
4. Constant elasticity families
Constant elasticity families
5. Computing the elasticity
For demand P equals 10 minus Q over 10, what is the elasticity at price 6, quantity 40?
6. Revenue direction
Demand is inelastic at the current price. What does a small price rise do to revenue?
7. Marginal revenue at work
For the same demand, what is marginal revenue at quantity 40, and what does the number mean?
8. The unit-elastic special case
Demand is Q equals 100 over P. What is revenue at price 5, and at any price?
9. Elasticity on the lower half
Same linear demand, compute the elasticity at price 2, quantity 80, and write the number with sign.
10. Revenue peak quantity
At what quantity does revenue peak for this demand, where MR equals zero? Write the number.
11. Elasticity near the top
For demand P equals 10 minus Q over 10, what is the elasticity at price 8, quantity 20?
12. Marginal revenue up high
Same demand, what is marginal revenue at quantity 20, and what does it say?
13. The unit-elastic midpoint
What is the elasticity at price 5, quantity 50, the demand's midpoint?
14. Revenue climbing toward the peak
Output rises from 40 to 50 on this demand curve. What happens to revenue?
15. Revenue at the peak
For P equals 10 minus Q over 10, compute total revenue at quantity 50, and write the number.
16. Elasticity at price 4
Same demand, compute the elasticity at price 4 with quantity 60, and write the number with sign, rounded to two decimals.
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