Macrohard Corporation, a company that manufactures and markets low-end cellphones, asked our friend
Ms. Market Researcher to create the demand curve for its Umbra 520 model. She conducted some market
research and gave Macrohard the demand curve as well as some additional information: 300,000 units of
Umbra 520 will sell at a price of $200.
(1) What is the point price elasticity if 340,000 units will sell at a price of $180? Is this an example of
elastic demand, inelastic demand, or something else?
(2) What is the point price elasticity if 225,000 units will sell at a price of $275? Is this an example of
elastic demand, inelastic demand, or something else
Sample Solution
