Suppose you work for a local car parts supplier, and you’re looking at ways to increase revenue.  You remember from your economics course, that people respond to price changes.  You decide to test this theory.  Assume, that as the price of an alternator falls from $40.00 to $38.00 the quantity of Y demanded increases from 110 to 118. Then the coefficient of price elasticity of demand is:  If you want to increase revenue, you should:

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A: The mid point formula of income elasticity is given as : e = ∆Q / ∆ M × M2 + M1 / Q2 + Q1

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A: Price elasticity of demand refers to the responsiveness of change in the quantity demand due to…

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A: price elasticity of demand = percentage change in quantity demanded / percentage change in price

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A:

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A: Given Demand Funcation = Q = 36-4PPrice  = 5 Q = 36 - 4 x 5    = 36 - 20    =16 ∆Q∆P = -4

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A: True To determine how revenue can be increased, information about elasticity of demand is required.

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A: The following questions are solved as follows:

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A:

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A:

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A: 1.

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