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The following graph shows the market for widgets in a local hardware store.

a) identify whether the price of widgets from $8 to $7 is elastic, unit elastic, or enelastic. Explain.

b) what is the price of widgets that maximize the hardware store’s revenue? Explain.

c) The price of widget is $9. If the hardware store wants to increase its revenue, how should it change the price? Explain.

d) using the midpoint formula, calculate the price elasticity of demand for widgets when price increases from $7 to $8. Identify the coefficient as elastic, unit elastic or inelastic.

e) using the midpoint formula, calculate the price elasticity of demand for widgets when price decreases from $6 to $5. Identify the coefficient as elastic, unit elastic or inelastic.

f) based on the scenario in part E, how does the decrease in price affect the hardware store’s revenue?

The following graph shows the market for widgets in a local hardware store a identify whether the price of widgets from 8 to 7 is elastic unit elastic or enelas class=

Respuesta :

azikennamdi

From the information given, the price of widgets is price elastic. This is because a reduction in price translated to change in revenue.

What is the explanation for the above?

Note that

Price of widgets= $8

Recall that

Total revenue = P*Q; thus

= 8*12

= $96

Where price is $7;

Therefore,

Total revenue(TR) is derived as;
= 7 x 16

= $112

Hence, the fall in price led to a rise in TR. This means that the demand is price elastic.

Learn more about price elasticity at;
https://brainly.com/question/5078326
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