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Answer to Question #67170 in Macroeconomics for soumedha Ramkhelawon

Question #67170
Where along a straight-line demand curve does consumer spending reach a maximum?Explain why. What use is this information to the owner of a football club?
Expert's answer
Midpoint of demand curve - the total expenditure (consumer spending) as a function of price is a parabola that reaches a max at the midpoint(demand is unit elastic at this point).

Demand is inelastic at prices below the midpoint price, and demand is elastic at prices above the midpoint price.

The owner of the football club will conduct a pricing policy depending on the elasticity of demand

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Comments

Assignment Expert
06.04.17, 15:33

Dear visitor,
please use panel for submitting new questions

NATASHA CHUCKRVANEN
05.04.17, 19:39

A firm’s demand function for good x is estimated as follows:-

Qx = 1800 –1/4Px + 1/8Py – 1/3Pz + 1/5Y

Where Qx represents quantity demanded of good x, Px is price of good x, Py is price of good y, Pz is price of good z and Y is income.
Explain whether goods Y and Z are substitutes or complements for good X. (5 marks)

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