A company determines the demand, in hundreds, for their novelty t-shirts to be D(q) = 400 -
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A company determines the demand, in hundreds, for their novelty t-shirts to be D(q) = 400 - p2, where p is the price for one shirt.
(a) Find the elasticity of demand E.
(b) If the price is $5 per shirt, calculate the elasticity. Is the demand elastic or inelastic? Will an increase in price result in an increase in total revenue?
(c) Suppose instead the price is $15 per shirt. Calculate the elasticity and determine if the demand is elastic or inelastic. Will an increase in price result in an increase in total revenue?
(d) Find the price that maximizes revenue. What is the maximum revenue?
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D p q 400 p 2 a b When p 5 Since E 1 supply is inelastic This i...View the full answer
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