Suppose I estimate the following demand function for a watch I produce and sell:
Q = 10000 – 4P +200PR
Where:
Q = quantity demanded in units
P = price in dollars
PR = number of YouTubers who positively review my watch
We are currently operating at the following values:
P = $400
PR = 10
In addition, suppose MC is $300.
Given all this, please answer the following questions:
(1 point) Derive the firm’s current demand curve and calculate and interpret the firm’s current price elasticity of demand. Be as precise as you can with your elasticity interpretation.
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