Answer to Question #83166 in Microeconomics for baba

Question

You have been appointed as the marketing manager of start-up Brewery Company in South Africa. You know that the demand for the new beer in any given week is the followingQ_D: =550,000 – 50,000P.
The current price of the new beer is R4.00 per unit. You have been instructed by the managing Director to maximise the sales revenue of the company.
4.1 complete the following table (use the point formula i.e Q/P x(P/Q) to calculate the price elasticity) (15 marks)
Price Quantity demanded Price elasticity Total revenue

R1.00
R2.00
R3.00
R4.00
R4.50
R5.50
R6.00
R7.00
R8.00
R9.00
R10.00

4.2 explain whether you will increase or decrease the price of beer to increase the company’s sales revenue, establish the revenue-maximising price. Use the table above to explain your answer. (5 marks)

Answer 1

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