Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 6 - Elasticity - Review Questions - Page 150: 1

Answer

Elastic

Work Step by Step

Given TR=600 & TR‘= 600 & p= 30 & p‘=20 , we have to find the Q and Q’ A/q Apply the formula TR= P×Q & TR’= P’×Q’ Again , TR=P×Q => 600= 30×Q => Q=20. TR’=P’×Q’ => 600= 20×Q’ => Q’=30 Again, Cofficient of price elasticity (Ed) = ∆Q÷Q+Q’÷2 ÷ ∆P÷P+P’÷2 => 30-20÷ 25 ÷ 20-30÷ 25 => 10÷ 25×25÷10 = 1 (Elastic demand).
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