Question: Question 3 [20 Marks] Assume that the following table represents the demand schedule for the product of your company: Price/Rand 0 10 20 30 40

Question 3 [20 Marks] Assume that the following table represents the demand schedule for the product of your company:

Price/Rand 0 10 20 30 40 50 60 70 80

Quantity per day 800 700 600 500 400 300 200 1000

3.1 Assume that the current price of your product is R70 and the quantity demanded per day is 100. Use the data above to draw the relevant demand curve and the corresponding total revenue (TR) curve. [10 Marks]

3.2 An effective pricing strategy is required in order to increase the total revenue (TR) of a business. What role does price elasticity of demand play in its strategy? What is the relation between price elasticity of demand and total revenue? [10 Marks]

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