You have been asked to analyze the market for steel.
From public sources, you are able to find that last year’s price for steel was $20 per ton. At this price, 100 million tons were sold on the world market. The current price of steel is $15 per ton and the current level of worldwide sales of steel is 150 million tons.
A. Write an equation for the demand curve.
1. Calculate slope.
2. Calculate intercept.
3. Y= mX+b format.
B. Graph the demand curve. Label.
C. Find the price elasticity of demand for steel at prices between $15 and $20 per ton.
D. Interpret the elasticities with respect to the price decrease and explain how it will affect total revenue.