The demand equation for a product is q = p + In (65-p). (a) Determine the point elasticity of demand when p = 4 and classify the demand as elastic, inelastic, or of unit elasticity at this price level. (b) If the price is lowered by 2% (from $4.00 to $3.92), use the answer to part (a) to estimate the corresponding percentage change in quantity sold. (c) Will the changes in part (b) result in an increase or decrease in revenue? Explain. ..... (a) The point elasticity of demand is when p= 4. (Round to two decimal places as needed.)

The demand equation for a product is q = p + In (65-p). (a) Determine the point elasticity of demand when p = 4 and classify the demand as elastic, inelastic, or of unit elasticity at this price level. (b) If the price is lowered by 2% (from $4.00 to $3.92), use the answer to part (a) to estimate the corresponding percentage change in quantity sold. (c) Will the changes in part (b) result in an increase or decrease in revenue? Explain. ..... (a) The point elasticity of demand is when p= 4. (Round to two decimal places as needed.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14A: The Practice Of Revenue Management

Section: Chapter Questions

Problem 1E

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