1.9 Price Elasticity - Practice Problems
The demand for monthly cell phone plans is given by:
qD=50−0.5p
1.
Write the inverse demand function.
2.
Calculate the price elasticity of demand when the price is $10. Is this relatively elastic or inelastic?
3.
Calculate the price elasticity of demand when the price is $70. Is this relatively elastic or inelastic?
4.
At what price is demand unit elastic (ϵ=−1)?
5.
Calculate the total revenue at $10.
6.
Calculate the total revenue at $70.
7.
Calculate the total revenue at the price you found for question 4.