1.7 — Price Elasticity — Practice

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The demand for monthly cell phone plans is given by:

\[q_D = 50-0.5p\]

Question 1

Write the inverse demand function.

Question 2

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

Question 3

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

Question 4

At what price is demand unit elastic \((\epsilon=-1)\)?

Question 5

Calculate the total revenue at $10.

Question 6

Calculate the total revenue at $70.

Question 7

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