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##### The demand function for a cola-type soft drink in general is q= 20 ? 2P, where Q stand for quantity and P stands for price.

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Q2) The demand function for a cola-type soft drink in general is q= 20 ? 2P, where Q stand for quantity and P stands for price.;a. Calculate point elasticities at prices of 5 and 9. Is the demand curve elastic or inelastic at these points?;b. Calculate arc elasticity at the interval between P = 5 and P = 6.;c. At which price would a change in price and quantity result in approximately no change in the total revenue? Why?;3. ABC Sports, a store that sells various types of sports clothing and other sports items, is planning to introduce a new design of Arizona Diamondbacks' baseball caps. A consultant has estimated the demand curve to be;Q = 2,000 - 100P;where Q is cap sales and P is price.;a. How many caps could ABC sell at \$6 each?;b. How much would the price have to be to sell 1,800 caps?;c. Suppose ABC were to use the caps as a promotion. How many caps could ABC give away free?;5. Mr. Smith has the following demand equation for a certain product: Q = 30 - 2P.;a. At a price of \$7, what is the point elasticity?;b. Between prices of \$5 and \$6, what is the arc elasticity?;c. If the market is made up of 100 individuals with demand curves identical to Mr. Smith's, what will be the point and arc elasticity for the conditions specified in parts a and b?

Paper#18342 | Written in 18-Jul-2015

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