Answer to Question #183156 in Microeconomics for hannah

Question

Mary is a smart entrepreneur in her primary school. She sells ball points to her fellow school mates. At a price of $2.00 each, she sells 100. At a price of $1.50 each, she sells 300.

(i) Is Mary’s demand elastic or inelastic over this price range? (5 marks)

(ii) If demand had the same elasticity for a price decline from $1.50 to

$1.00 as it does for the decline from $2.00 to $1.50, would cutting the price

from $1.50 to $1.00 increase or decrease Mary’s total revenue?

Answer 1

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