Graph the line with slope -1/3 passing through the point (2, 1).
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From the given price function, we have;
(a)
(b) The point elasticity of demand is 0.0256<u>;</u><u> </u><u>i</u><u>nelastic demand</u>
(c) $46.6
(d) Increase
<h3>How can the elasticity of demand be found?</h3>a. The given function is presented as follows;
Differentiating the above function with a graphing calculator and setting q = 150 gives;
b. The point elasticity of demand is given by the formula;
When q = 150, we have;
P = 50
Which gives;
The point elasticity of demand, <em>E </em>= <u>0.0256</u>
- The <u>demand is inelastic</u> (less than 1) when the quantity demanded is 150 units
c. If the quantity demanded decreases from 150 to 140 units, we have;
Which gives;
p = 46.6
- The price when the quantity demanded decreases to 140 is <u>$46.6</u>
d. Given that increase in price, from 46.6 to 50, increases the quantity demanded from 140 to 150, therefore;
- The manufacturer should<u> increase the price</u>, <em>p </em>to increase the revenue, <em>R</em>.
R = p × q
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