Total Revenue and Elasticity of Demand. Suppose the demand for buko pie in Los Baños is given to be: X = 200 – 2.5 P. The current price of buko pie is P55 per box. The producers are planning to increase the price of buko pie to P60 per box to increase revenue. a. What is the price elasticity of demand at the current price and consumption level? b. Would raising the current price at all increase total revenue? Why? c. What price would you recommend to maximize total revenue? Compute for the elasticity at this point. d. From the price in letter c, by how much would revenue change if the price was further reset to P65 per box. What would explain this?
Total Revenue and Elasticity of Demand. Suppose the demand for buko pie in Los Baños is given to be: X = 200 – 2.5 P. The current price of buko pie is P55 per box. The producers are planning to increase the price of buko pie to P60 per box to increase revenue. a. What is the price elasticity of demand at the current price and consumption level? b. Would raising the current price at all increase total revenue? Why? c. What price would you recommend to maximize total revenue? Compute for the elasticity at this point. d. From the price in letter c, by how much would revenue change if the price was further reset to P65 per box. What would explain this?
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter19: Elasticity
Section: Chapter Questions
Problem 2QP: For each of the following, identify where demand is elastic, inelastic, perfectly elastic, perfectly...
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Total Revenue and
– 2.5 P. The current
pie to P60 per box to increase revenue.
a. What is the
b. Would raising the current price at all increase total revenue? Why?
c. What price would you recommend to maximize total revenue? Compute for the elasticity at this
point.
d. From the price in letter c, by how much would revenue change if the price was further reset to P65
per box. What would explain this?
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