1.7 — Price Elasticity — Practice

The demand for monthly cell phone plans is given by:

$q_{D} = 50 - 0.5 p$

Question 1

Write the inverse demand function.

Calculate the price elasticity of demand when the price is $10. Is this relatively elastic or inelastic?

Calculate the price elasticity of demand when the price is $70. Is this relatively elastic or inelastic?

At what price is demand unit elastic $(ϵ = - 1)$ ?

Calculate the total revenue at $10.

Calculate the total revenue at $70.

Calculate the total revenue at the price you found for question 4.