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Answer to Question #70057 in Economics of Enterprise for Melvin Muleya

Question #70057
a) Assuming you are a manager of a beverage manufacturing company and you are operating in a non-competitive market were your firms total cost of production is zero. Indicate what you as the manager must do (cut or raise production) to raise revenue when ;
I. Price elasticity of demand is elastic
II. Price elasticity of demand is inelastic
III. Price elasticity of demand is unit elastic
b) Suppose you decide to produce a drink and you discover it has a demand function given by
Expert's answer
a)
I. Price elasticity of demand is elastic - cut production,
II. Price elasticity of demand is inelastic - raise production,
III. Price elasticity of demand is unit elastic - any change will have no effect.
b) The question is incomplete, so it can't be answered without additional information.

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Comments

Assignment Expert
15.09.17, 15:32

Dear Melvin, your question is still incomplete. Please use the panel to submit a new question.

Melvin Muleya
15.09.17, 09:52

b) Suppose you decide to produce a beverage and you discover it has a demand function given by

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