Think about the market for chocolate bars. Market research has revealed the demand andsupply equations as follows:QD 1600- 200PQs = 100+ 100PWhere, P is the price in £ (UK pounds), QD and Qs are quantity demanded and supplied forthe product, respectively.C) Compute the price elasticity of demand between the price of £3 and £4. Use themid-point (arc) method (use 2 decimal places).D) If the market price is now at £3, should a chocolate bar firm increase its price toincrease its total revenue? Explain why or why not.

We have given the following demand function for chocolate bars. QD = 1600 - 200PWhere QD is the…

Think about the market for chocolate bars. Market research has revealed the demand and supply equations as follows: QD 1600-200P Qs = 100+ 100P Where, P is the price in £ (UK pounds), QD and Qs are quantity demanded and supplied for the product respectively

Think about the market for chocolate bars. Market research has revealed the demand and supply equations as follows: QD 1600-200P Qs = 100+ 100P Where, P is the price in £ (UK pounds), QD and Qs are quantity demanded and supplied for the product respectively

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter20: Elasticity: Demand And Supply

Section: Chapter Questions

Problem 13E: Using the following equation for the demand for a good or service, calculate the price elasticity of...

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Question

Think about the market for chocolate bars. Market research has revealed the demand and
supply equations as follows:
QD 1600- 200P
Qs = 100+ 100P
Where, P is the price in £ (UK pounds), QD and Qs are quantity demanded and supplied for
the product, respectively.
C) Compute the price elasticity of demand between the price of £3 and £4. Use the
mid-point (arc) method (use 2 decimal places).
D) If the market price is now at £3, should a chocolate bar firm increase its price to
increase its total revenue? Explain why or why not.

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