Question

The number of people taking city buses at price p dollars per ticket is given by...

The number of people taking city buses at price p dollars per ticket is given by D(p)=50006−p‾‾‾‾‾√

(a) Find the elasticity function: E(p)=___________

(b) Evaluate the elasticity at 2. E(2)= __________

(c) Currently, the price per ticket is 2 dollars. Should the price be raised in order to increase revenue?

(d) Use the elasticity of demand to find the price which maximizes revenue? p= ________________

Homework Answers

Answer #1

we have

the elasticity of the demand is,

........................a)

put p = 2

.....................b)

here E < 1,

the demand is inelastic,

yes, the price be raised in order to increase revenue. ...............c)

now E = 1 for the maximum revenue,

....................d)

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