Demand Curve
Q = 5000 – 10P
a) Find equation for Total Revenue
b) Find equation for Marginal
Revenue
Q = 5000 – 10P
• Find price and quantity at which Total
Revenue is maximized.
• What is the level of maximum revenue
Demand Curve
Q = 500 – ½ P
• A) calculate the point elasticity of demand
when price is $100
• B) calculate the point elasticity of demand
when price is $700
• C) Find the point at which point elasticity of
demand is equal to -1
Regression equation
Q = 15,000 – 10P + 1500A + 4Px 2I
• Standard errors of the coefficients are 5234,
2.29, 525, 1.75, 1.5
• P is price; A is advertising, Px is price of
competitor’s product, I is income
• R squared is 0.65
• A) calculate the t-statistics and explain
• B) should this firm be concerned if forecasters
predict a recession
Demand equation
Q = 500 – 25P
Supply equation
Q = -250 + 50 P
A) what is the equilibrium Price
and Quantity in this market
Demand equation
Q = 31,000 -2000P
Supply Equation
Q = 10,000 + 1500P
• A) If the price was $7.00, what would result?
Demand equation
Q = 400 – 10P
Supply equation
Q = -200 + 20P
• If the price is $15, what will be the result in
this market?
Demand equation
Q= 1500 – 100P + 75Px + 1.5I +
0.6A
• If Px is $40.00, I is $2500, A is $5000: what is
the Total Revenue equation?
• What is the Marginal Revenue equation?
You raise the price of your product
by 40%. The quantity demanded
does not change.
• What does this tell you about the demand for
your product?
If the income elasticity of a good is
greater than 0 but less than 1:
• What type of good is this?
The price of product X has just
increased by 20%. Product Y’s
sales decrease as a result.
• What does this tell you about the two goods?
Demand equation
Q = 5000 -250P + 120Px +0.04I
If Px is $50.00, and I is $60000
• A) What is the demand curve?
• B) What is the Average Revenue (Price)
equation?
• C) What is the Total Revenue Equation?
• D) What is the Marginal Revenue Equation?
• E) At what quantity is MR = 0?