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# 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.

##### Solution Summary

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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###### Education
• MCom, Annamalai University
• IATA, International Air Transport Association
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