Demand and Price Elasticity
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Price Quantity Demanded
$25 150,000
$40 130,000
$75 60,000
If the firm is currently charging $75, should it lower its price to $40? Explain why or why not.
If the firm is currently charging $40, should it raise its price to $75? Explain why or why not.
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The Solution addresses two price changes.
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Price Quantity Demanded
$25 150,000
$40 130,000
$75 60,000
If the firm is currently charging $75, should it lower its price to $40? Explain why or why not.
Total revenues when price is $75 = 60,000 units * $75 = $4,500,000
Total revenues when price is $40 = 130,000 units * $40 = $5,200,000
Price elasticity of demand = Percentage change in the quantity demanded / Percentage change in price
Percentage change ...
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- MPhil, Madurai Kamaraj University
- MCom, Annamalai University
- IATA, International Air Transport Association
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