Suppose Erin, the owner-manager of a local hotel, projects the following demand for her rooms: 

a. Calculate the price elasticity of demand between $90 and $110. 

b. Is the price elasticity of demand between $90 and $110 elastic, unit elastic, or inelastic? 

c. Will Erin’s total revenue rise if she increases the price from $90 to $110? 

d. Calculate the price elasticity of demand between $110 and $130. 

e. Is the price elasticity of demand between $110 and $130 elastic, unit elastic, or inelastic? 

f. Will Erin’s total revenue rise if she increases the price from $110 to $130?

Transcribed Image Text:

PRICE $90 110 130 QUANTITY PURCHASED (per Night) 100 90 70