1/Consider the demand curve Q=100-50P. Draw the demand curve and indicate which portion of the curve is elastic, which portion is inelastic, and which portion is unit elastic.
Suppose the demand for crossing the Golden Gate Bridge is given by Q=10,000 – 1000P.
If the toll (P) is $3, how much revenue is collected? (15 points)
What is the price elasticity of demand at this point? (10 points)
Could the bridge authorities increase their revenues by changing their price? How? (15 points)
The point of intersection between the vertical axis and the demand curve is perfectly elastic.
The point of intersection between the horizontal axis and the demand curve is perfectly inelastic.
Exactly middle of the demand curve is unit elastic.
The segment between the price axis intercept and the middle point is relatively elastic. And the segment between the quantity axis and the middle point is relatively inelastic.
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