Question 1) The following function describes the demand condition for a company that makes caps featuring names of college and professional teams in a variety of sports.
Q = 2,000 - 100 P; where Q is cap sales and P is price.
a) How many caps could be sold at $12 each?
b) What should the price be in order for the company to sell 1,000 caps?
c) At what price would cap sales equal zero?
Question 2: The Teenager Company makes and sells skateboards at an average price of $70 each.During the past year, they sold 4,000 of these skateboards. The company believe that the price elasticity for this product is about -2.5.If it decreases the price to $63, what should be the quantity sold? Will revenue increase? Why?