1.9 Price Elasticity - Practice Problems
The demand for monthly cell phone plans is given by:
\[q_D = 50-0.5p\]
1.
Write the inverse demand function.
2.
Calculate the price elasticity of demand when the price is $10. Is this relatively elastic or inelastic?
3.
Calculate the price elasticity of demand when the price is $70. Is this relatively elastic or inelastic?
4.
At what price is demand unit elastic \((\epsilon=-1)\)?
5.
Calculate the total revenue at $10.
6.
Calculate the total revenue at $70.
7.
Calculate the total revenue at the price you found for question 4.