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Demand is rep as:  q= (100- p)^2 Determine the price elasticity of demand at $30 and explain...

Demand is rep as:  q= (100- p)^2

Determine the price elasticity of demand at $30 and explain what you think about setting the price at $30. Would you change the price to maximize revenue?

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Answer #1

In the question ,we have given a demand function and price as $30 and we have been asked to find price elasticity of demand at this price and also we also want to know if this price maximizes revenue.

For the price elasticity of demand we have to firstly differentiate the demand function with respect to quantity q and then use the value in the price of demand formula which is percentage change in quantity divided by percentage change in price.

For the second part , we have to find derivative of revenue function and set that equal to zero.

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