Question: Need solution There are two types of consumers: 21 = 500 - 2P + 21, where I is income of the group. Currently P1 =

Need solution

Need solution There are two types of consumers: 21 = 500 -

There are two types of consumers: 21 = 500 - 2P + 21, where I is income of the group. Currently P1 = 200 Q2 = 1000 - P + 1 P2 = 500 11 = 50 12 = 100 1) Find the current price elasticity of demand in each group 2) Find the income elasticity of demand in each group 3) Should you increase or decrease the price in each group if you want to increase the revenue? 4) Now assume that you can not price discriminate (both types of consumers have to pay the same price). Find the price that maximizes the total revenue in that case

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!