Samri and Vinita both have cell phones. Samri pays $75.89 per month plus $0.12 per text message to use his cellphone. Vinita pay
2 answers:
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Answer:
Demand is inelastic at p = 9 and therefore revenue will increase with
an increase in price.
Step-by-step explanation:
Given a demand function that gives <em>q</em> in terms of <em>p</em>, the elasticity of demand is
- If E < 1, we say demand is inelastic. In this case, raising prices increases revenue.
- If E > 1, we say demand is elastic. In this case, raising prices decreases revenue.
- If E = 1, we say demand is unitary.
We have the following demand equation ; p = 9
Applying the above definition of elasticity of demand we get:
where
- p = 9
- q =
Substituting the values
Demand is inelastic at p = 9 and therefore revenue will increase with an increase in price.