Answer to Question #142342 in Finance for Mr. Dinesh Pal Singh

Question

35. Demand for a managerial economics text is given by Q = 20,000 – 300P. The book is initially priced at $30:
i) Compute the point price elasticity of demand at P= $30.
ii) If the objective is to increase total revenue, should the price be increased or decreased? Explain.
iii) Compute the arc price elasticity for a price decrease from $30 to $20.
iv) Compute the arc price elasticity for a price decrease from $20 to $15.

Answer 1

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