# What is the point price elasticity of demand when P=\$83?

Copy and paste the following data into Excel: P Q \$130 78 \$110 155 \$90 246 \$70 318 \$50 Show more Copy and paste the following data into Excel: P Q \$130 78 \$110 155 \$90 246 \$70 318 \$50 397 a. Run OLS to determine the inverse demand function (P = f(Q)); how much confidence do you have in this estimated equation? Use algebra to then find the direct demand function (Q = f(P)). b. Using calculus to determine dQ/dP construct a column which calculates the point-price elasticity for each (PQ) combination. c. What is the point price elasticity of demand when P=\$90? What is the point price elasticity of demand when P=\$83? d. To maximize total revenue what would you recommend if the company was currently charging P=\$83? If it was charging P=\$70? e. Determine an equation for MR as a function of Q and create a graph of P and MR on the vertical and Q on the horizontal axis. f. Use your direct demand function to construct an equation and column for TR. What is the total-revenue maximizing price and quantity and how much revenue is earned there? Compare that to the TR when P = \$83 and P = \$70. Show less

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