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Travis s demand for ice cream is QT = 12 - 3P and Maya s is QM = 6 - P
Travis s demand for ice cream is QT = 12 - 3P and Maya s is QM = 6 - P.
1) Find the market demand for ice cream if Travis and Maya are the only two consumers in the market.
2) What is the price elasticity of demand when P = 2?
3) At this price, is demand elastic, unit elastic, or inelastic?
4) If this price were to increase by a little bit, what would happen to the total revenues from ice cream sales?c
Expert Solution
1)
market demand for ice cream:
2)
price elasticity when P = 2:
3)
At this price, elasticity is less than 1, thus, inelastic.
4)
If the price increases, total revenue would rise marginally, also a small fall in demand.
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