Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $2.25 each, he sells 250. At a price of $1.75 each, he sells 300. Instructions: Use the midpoint method and round your answer to two dtimal places. Do not include a negative sign (-). a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? Inelastic O Elastic c. If demand had the same elasticity for a price decline from $1.75 to $1.25 as it does for the decline from $2.25 to $1.75, would cutting the price from $1.75 to $1.25 increase or decrease Danny's total revenue? Increase O Decrease
Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $2.25 each, he sells 250. At a price of $1.75 each, he sells 300. Instructions: Use the midpoint method and round your answer to two dtimal places. Do not include a negative sign (-). a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? Inelastic O Elastic c. If demand had the same elasticity for a price decline from $1.75 to $1.25 as it does for the decline from $2.25 to $1.75, would cutting the price from $1.75 to $1.25 increase or decrease Danny's total revenue? Increase O Decrease
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter6: Simple Pricing
Section: Chapter Questions
Problem 6.1IP
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