Question 3 (10 marks) A firm is analysing the impact of a price increase on meat. The

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Question 3 (10 marks) A firm is analysing the impact of a price increase on meat. The price was increased from R70 to R78 per kilogramme (kg), resulting in a decline in quantity demanded, from 1 600 to 1 500 kg per week. Answer the following questions accordingly: 3.1 Calculate the price elasticity of demand for meat in this price range, based on the arc formula. (4)

3.2 Classify the elasticity category for meat based on your answer in Question 3.1. (2) 3.3 Given that the price increase resulted in reduced sales, using the elasticity coefficient and the revenue test, explain whether you think the decision to increase the price was sound. (4)