The Elasticity of Demand: Total Revenue
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Your firm's research department has estimated the elasticity of demand for toys to be -0.7. As the manager of the firm, determine the impact of an 8 percent increase in toy prices on your total revenues.
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Solution Summary
This solution looks at the elasticity of demand and its impact on total revenue by providing a step-by-step solution for a sample problem.
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Solution:
We can find the percentage change in quantity demanded by using the following formula:
Price Elasticity of Demand = % Change in ...
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