Objective: To apply the concepts of marginal analysis, elasticity of demand in problem solving and exercises.

1. The demand function of a certain item is p = 80 -2q and the total cost function of producing q units is C(q) = 500 - 20qUse marginal analysis to estimate the utility of producing and selling the sixteenth (16) unit.

2. When a hairdresser sets a fee of $ 10,000 per haircut, it warns that the number of clients it serves in a week is 100, on average. By raising the rate to $15000, the number of customers per week drops to 80. Assuming a linear demand equation between price and number of customers, calculate:

1. The income function
2. The marginal revenue of serving 61 clients
3. The price that produces a marginal revenue equal to zero.

3. The demand equation for a product is q = 500 - 3p - p2; where p is the price per unit (in dollars) andq is the number of units demanded (in thousands).

Find the elasticity of demand q = 10

4.Suppose the demand equation of a certain item is q= 60 - 0.1p for ( 0

1. Express the elasticity of demand as a function of p
2. Calculate the elasticity of demand when the price is p = 200
3. At what price is the elasticity of demand equal to -1?