You own Naughty Pine lumber and sell fence panels in a competitive market. Right now, your selling price is $130 for a fence panel, and you sell 8 panels a day. You are considering changing your price. You estimate that if you raise your price to $152 a panel, you would sell 7 panels a day. On the other hand, if you lower your price to $108 a panel, you would sell 12 panels a day. (a) Draw a graph of the above information. Label your axes, and the curve. Be sure your work is clear. (b) Use the MIDPOINT FORMULA to calculate Ed over the ranges below. Use TWO decimals in your answers. (i)Calculate the price elasticity of demand for a price change from $130 to $152 and daily Total Revenue if you change your price to $152 a panel (ii)Calculate the price elasticity of demand for a price change from $130 to $108 and daily Total Revenue if you change your price to $108 a panel Should you keep your current price, or raise the price, or lower the price?
You own Naughty Pine lumber and sell fence panels in a competitive market. Right now, your selling
(a) Draw a graph of the above information. Label your axes, and the curve. Be sure your work is clear.
(b) Use the MIDPOINT FORMULA to calculate Ed over the ranges below. Use TWO decimals in your answers.
(i)Calculate the
(ii)Calculate the price elasticity of demand for a price change from $130 to $108 and daily Total Revenue if you change your price to $108 a panel
Should you keep your current price, or raise the price, or lower the price?
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