Answer: a)
, b) 0.7975, demand is inelastic, c) increase.
Step-by-step explanation:
Since we have given that
![D(x)=\dfrac{5x+200}{30+11}](https://tex.z-dn.net/?f=D%28x%29%3D%5Cdfrac%7B5x%2B200%7D%7B30%2B11%7D)
So, derivative w.r.t x would be
![D'(x)=\dfrac{5(30x+11)-30(5x+200)}{(30x+11)^2}\\\\D'(x)=\dfrac{150x+55-150x-6000}{(30x+11)^2}\\\\D'(x)=\dfrac{5945}{(30x+11)^2}](https://tex.z-dn.net/?f=D%27%28x%29%3D%5Cdfrac%7B5%2830x%2B11%29-30%285x%2B200%29%7D%7B%2830x%2B11%29%5E2%7D%5C%5C%5C%5CD%27%28x%29%3D%5Cdfrac%7B150x%2B55-150x-6000%7D%7B%2830x%2B11%29%5E2%7D%5C%5C%5C%5CD%27%28x%29%3D%5Cdfrac%7B5945%7D%7B%2830x%2B11%29%5E2%7D)
As we know that
![E(x)=\dfrac{-xD'(x)}{D(x)}\\\\\\E(x)=\dfrac{\dfrac{-(-)5945x}{(30x+11)^2}}{\dfrac{5x+200}{30x+11}}\\\\\\E(x)=\dfrac{5945x}{(30x+11)(5x+200)}](https://tex.z-dn.net/?f=E%28x%29%3D%5Cdfrac%7B-xD%27%28x%29%7D%7BD%28x%29%7D%5C%5C%5C%5C%5C%5CE%28x%29%3D%5Cdfrac%7B%5Cdfrac%7B-%28-%295945x%7D%7B%2830x%2B11%29%5E2%7D%7D%7B%5Cdfrac%7B5x%2B200%7D%7B30x%2B11%7D%7D%5C%5C%5C%5C%5C%5CE%28x%29%3D%5Cdfrac%7B5945x%7D%7B%2830x%2B11%29%285x%2B200%29%7D)
(b) Find the elasticity when x = 2.
So, we put x = 2, we get that
![E(2)=\dfrac{5945\times 2}{(30(2)+11)((5(2)+200))}\\\\E(2)=\dfrac{11890}{(60+11)(10+200)}\\\\E(2)=\dfrac{11890}{71\times 210}\\\\E(2)=\dfrac{11890}{14910}\\\\E(2)=0.7975](https://tex.z-dn.net/?f=E%282%29%3D%5Cdfrac%7B5945%5Ctimes%202%7D%7B%2830%282%29%2B11%29%28%285%282%29%2B200%29%29%7D%5C%5C%5C%5CE%282%29%3D%5Cdfrac%7B11890%7D%7B%2860%2B11%29%2810%2B200%29%7D%5C%5C%5C%5CE%282%29%3D%5Cdfrac%7B11890%7D%7B71%5Ctimes%20210%7D%5C%5C%5C%5CE%282%29%3D%5Cdfrac%7B11890%7D%7B14910%7D%5C%5C%5C%5CE%282%29%3D0.7975)
Since, 0.7975 < 1, so the demand is inelastic.
(c) At $2 per plant, will a small increase in price cause the total revenue to increase or decrease?
The total revenue will also increase with increase in price.
As total revenue = ![price\times quantity](https://tex.z-dn.net/?f=price%5Ctimes%20quantity)
Hence, a)
, b) 0.7975, demand is inelastic, c) increase.