e) What is the difference between the demand function, direct demand curve, and

Question

e)         What is the difference between the demand function, direct demand curve, and inverse demand curve?

f)         If price and quantity are such that demand elasticity (in absolute value) is greater than 1.0, what happens to total revenue if price was to decrease vs. increase?

g)         If price and quantity are such that demand elasticity (in absolute value) is less than 1.0, what happens to total revenue if price was to decrease vs. increase?

h)         Total revenue is maximized if demand elasticity (in absolute value) equals what?

Explanation / Answer

e. Demand function demonstrates the connection between amount demanded for a specific ware and the variables impacting it. It very well may be either as for one buyer (singular interest work) or to every one of the purchasers in the market (advertise demand work).

The demand for a good is driven by its price. There is an inverse relationship between the price of a good and the quantity demanded of a good. At the point when the cost goes up, demand falls. At the point when the cost goes down, demand rises. The interest bend plots this relationship. In the interest bend work, amount is the autonomous variable and cost is the needy variable. A model interest bend capacity would be P = - 2Q. This relationship expresses that for each unit increment of amount; cost will drop by $2.

f) If price and quantity are such that demand elasticity (in absolute value) is greater than 1.0, then the total revenue will increase if price decreases and total revenue will decrease if price increases.

g) If price and quantity are such that demand elasticity (in absolute value) is less than 1.0, then the total revenue will decrease if price was to decrease or increase. In both situations total revenue will decrease.

h) Total revenue is maximized if demand elasticity (in absolute value) equals to -1.

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