Problem
Let us take another look at the demand for widgets as outlined in Assignments No. 3 & 4
|
Point on Demand Curve
|
A
|
B
|
C
|
D
|
E
|
F
|
G
|
H
|
I
|
|
Price (P):
|
$32
|
$28
|
$24
|
$20
|
$16
|
$12
|
$8
|
$4
|
$0
|
|
Quantity Demanded (QD):
|
0
|
3
|
6
|
9
|
12
|
15
|
18
|
21
|
24
|
1. Based on this demand schedule, set up a graph (using excel) showing this demand curve and another graph showing the corresponding total revenue curve (i.e., you need two separate graphs with quantity on the horizontal axis).
2. Copy and paste your Excel charts into a Word or pdf file with a short essay that explains how and why the price elasticity of demand changes as you move along this demand curve. As part of your essay, make sure that you discuss how and why the effect of price changes on total revenue is tied to elasticity.