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# Answer to Question #70536 in Economics of Enterprise for Zanab Nazir

Question #70536
NEXT is contemplating a T-shirt advertising promotion. Monthly sales data from T-shirt shops
Q = 1,500 – 200P
Where: Q is T-shirt sales and P is price.
A. How many T-shirts could NEXT sell at \$4.50 each?
B. What price would NEXT have to charge to sell 900 T-shirts?
C. At what price would T-shirt sales equal zero?
D. Calculate the point price elasticity of demand at a price of \$5?
Quantity of T-shirts at the price \$4.50 is:
Q = 1,500 – 200*4.5 = 600 (T-shirts)

Price for selling 900 T-shirts is:
900 = 1,500 – 200P
200P = 600
P = \$3
T-shirts sales equal zero at the price:
1,500 – 200P = 0
200P = 1,500
P = \$7.5
Quantity at the price of \$5:
Q = 1,500 – 200*5 = 500 (T-shirts)
Price elasticity of demand:
E = (Q2-Q1)/Q1 / (P2-P1)/P1 = (500-600)/600/(\$5-\$4.5)/\$4.5 = -1.5

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