# Eco – point price elasticity of demand problems

2. For each of the following cases, calculate the point price elasticity of demand, and state whether
demand is elastic, inelastic, or unit elastic. The demand curve is given by
QD = 5,000 – 50PX

a. The price of the product is \$50.
b. The price of the product is \$75.
c. The price of the product is \$25

3. For each of the following case, what is the expected impact on the total revenue of the firm?
A. Price elasticity of demand is known to be -0.5, and the firm raises price by 10 percent.
B. Price elasticity of demand is known to be 2.5 and the firm lower price by 5 percent.
C. Price elasticity of demand is known to be -1.0, and the firm raises price by 10 percent.
D. Price elasticity of demand is known to be 0, and the firm raises price by 50 percent.

4. The demand curve is given by
QD=500-2px
A. What is the total revenue function?
B. The marginal revenue function is MR=250-Q. Graph the total revenue function, the demand curve, and the marginal revenue function.
C. At what price is revenue maximized, and what is revenue at that point?
D. Identify the elastic and inelastic regions of the demand curve.

6. You have the following information for your product:
• The price elasticity of demand is -0.9.
• The income elasticity of demand is 0.5.
• The cross-price elasticity of demand between your good and a related good is 2.0.

What can you determine about consumer demand for your product from this information?

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