Elasticity The demand function for a product is given by (a) Consider a price of $2. If

Chapter 3, Problem 33

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Elasticity The demand function for a product is given by (a) Consider a price of $2. If the price increases by 5%, what is the corresponding percent change in the quantity demanded? (b) Average elasticity of demand is defined to be the percent change in quantity divided by the percent change in price. Use the percent in part (a) to find the average elasticity over the interval (c) Find the elasticity for a price of $2 and compare the result with that in part (b). (d) Find an expression for the total revenue and find the values of x and p that maximize the total revenue.

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