Ghose and Han (2014) found that the elasticity of demand for Google Play apps is −3.7. This elasticity applies to a small college town where approximately 1,000 apps per month are sold. If price rises by 10%, what would be the effect on quantity demanded? The quantity demanded will decrease by 37 percent. Would revenue rise or fall? Revenue would fall .

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Let initial price and quantity be P0 and Q0 respectively Initi... View the full answer