Elasticity v AutoSave (O Off ) View File Home Insert Draw Page Layout Formulas Data Review Automate Help Powe X Cut Times New Roman ~ 14 ~ A A ag Wrap Text Currency Copy Paste B I U - Merge & Center $ % " Format Painter Alignment Number Clipboard Font 127 M A B Elasticity Problem Ben and Jerry's is a popular brand of ice cream based in South Burlington, VT. They are known for their delicous and cleverly named flavors and their committment to social responsibility. Suppose the marketing department for a firm 4 like Ben and Jerry's estimates monthly demand for a pint of ice cream to be Q = 1050 - 125P. 5 a) Using the table provided and Excel functions, calculate quantity demanded for each of the prices given. b) Using the prices provided and quantity demanded you calculated in part a, calculate elasticity (in absolute 6 terms) for each point along the demand curve. 7 Q = 1050 - 125 P a) b) Price, $ Quantity Elasticity 6.50 237.5 3.42 6.25 268.8 2.91 6.00 2.50 5.75 331. 2.17 5.50 362.5 1.90 5.25 393.8 1.67 5.00 125.0 1.47 4.75 56.3 1.30 4.50 487.5 1.15 4.25 518.8 1.02 4.00 550.0 0.91 3.75 581.3 0.81 3.50 612.5 0.71 ) At which prices is demand elastic, inelastic, and unit elastic? Enter your answers using cell references to the table above. Price Price 24 From To Elastic $6.50 $4.25 26 Inelastic $4.00 $3.50 27 The demand is unit elastic at some price between land d) Are there prices between $3.50 and $6.50 which you are certain the company should not charge based on the 28 elasticities you observe? Assume your ice cream must be priced in $.25 increments. 29 The company should not charge below $4.25 e) If the goal of this firm was to maximize revenue, what price would you recommend they charge for a pint of 30 ice cream? Use functions and Excel's Solver functionality. Price (P) = $4.20 32 Quantity (Q) - 525 33 Revenue = 35 36 + Problem + Ready XX Accessibility: Investigate X