6. Elasticity and total revenue The following graph shows the daily demand curve for bikes in San Diego. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the...

Extracted text: 6. Elasticity and total revenue The following graph shows the daily demand curve for bikes in San Diego. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. 240 220 200 Total Revenue 180 160 * 140 120 100 80 60 40 20 Demand 18 27 36 45 54 63 72 81 90 108 QUANTITY (Bikes) On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $40, $60, $80, $100, $120, $140, and $160 per bike. On the following graph, use the green point (triangle symbol) to plot the annual total revenue when the market price is $40, $60, $80, $100, $120, $140, and $160 per bike. 6250 5820 Total Revenue 5390 4960 w 4530 4100 3670 3240 2810 2380 0.47 80 100 120 140 160 180 200 220 240 PRICE (Dollars per bike) 20 40 60 2.14 31.5 According to the midpoint method, the price elasticity of demand between points A and B is approximately Suppose the price of bikes is currently $60 per bike, shown as point B on the initial graph. Because the demand between points A and B is inelastic ,a $20-per-bike increase in price will lead to an increase v in total revenue per day. In general, in order for a price decrease to cause a decrease in total revenue, demand must be inelastic TOTAL REVENUE (Dollars) PRICE (Dollars per bike)