Hi, would anyone be able to help me with this question that I've been stuck on? I'll post the previous questions too with my answers because I think they're relevant.
The industry demand schedule for Nike trainers is as follows:
(c) Use the information provided to illustrate the demand schedule.
Okay so here I just did a demand curve with the quantities matching the prices
(d) Using the mid-point method, calculate and explain the significance of the price elasticity of demand as the price increases from £20-£25.
This is basically my answer in note form:15/37.5 = 0.4
5/22.5 = 0.22
0.4/0.22 = 1.8 (this is the PED)
Since PED>1, (elastic demand) then an increase in price leads to a more than proportionate fall in quantity demanded and total revenue decreases
This is the question I'm stuck on:
(e) Illustrate on the demand curve the point at which Nike would maximise its total revenue and discuss its significance in terms of elasticity.
If anyone could explain the answer to this for me I would seriously appreciate it!
Microeconomics question (I'M DESPERATE) watch
- Thread Starter
- 24-12-2014 23:12
- 27-12-2014 21:09
Multiply units by price for revenue
Think about the curve this forms