Demand Elasticity Exercise

The following is the demand schedule for the ABC Canoes, a family owned and operated business north of Toronto. The following prices are for a week's rental of a canoe.

PRICE (x $100) QUANTITY

0 250

1 200

2 150

3 100

4 50

5 0

a)Use the TR rule to indicate whether consumer demand is elastic, unit elastic or inelastic at

each price range.

b)Calculate the price elasticity of demand at each price range.

c) If ABC.com wants to maximize revenues, how much should they charge, and what will be

the revenue at this price?