1.7 — Price Elasticity — Practice Problems
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.