A firm is faced with the following demand function (estimated in a regression equation based on past data). QX = 200 – 4PX , where current price (PX ) = $30 The firm is thinking of reducing price to $25 because someone suggested that would bring in more revenue. a. What is the own-price elasticity of demand? (show absolute value) b. Is the demand function elastic, inelastic or unitary elastic at a price of $30? c. Will the price reduction bring in more revenue?

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