The demand schedule for computer chips is given in the table.
|
Price (dollars per chip)
|
Quantity demanded(millions of chips per year)
|
|
200
|
50
|
|
250
|
45
|
|
300
|
40
|
|
350
|
35
|
|
400
|
30
|
a. What happens to total revenue if the price falls from $400 to $350 a chip?
b. What happens to total revenue if the price falls from $350 to $300 a chip?
c. At what price is total revenue at a maximum?
d. At an average price of $350, is the demand for chips elastic, inelastic, or unit elastic? Use the total revenue test to answer this question.