(Answered) Calculating the price elasticity of demand

Economics

Problem:

X is a u.s. manufacturer of digital controls for milling machines. The firm has been exporting its least expensive model, which sells for US $1,500 to Mexico, where the demand has proved to be Q= 3,500 - 2P, where Q= quantity demanded and P= price. X wants to break into the south american markets in Brazil, Argentina and chile. if the demand in each of these countries is the same as in Mexico,

Requirement:

a. How many machines can X sell in all three countries?

b. At a price of $1,500, what will be the total revenue, TR, from sales in all three countries?

c. What is the price elasticity of demand in each country when the price is $1,500?

d. If the price is $1,500, what will be the marginal revenue, MR, in each country?

e. How many units must X sell in each country in order to maximize revenue? what would be the price?

f. What will the price elasticity be when total revenue is maximized answer with explanation

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Macroeconomics, Economics

Category:- Macroeconomics
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