Question: A monopolistic firm is considering to decrease the price of its product from $10 to $7.According to the available data, the quantity demanded will rise

A monopolistic firm is considering to decrease the price of its product from $10 to $7.According to the available data, the quantity demanded will rise from 1500 units to 2300 units.

(1)Using the midpoint method, compute the arc elasticity between two prices, $10 and $7.

(2)Based on the elasticity you computed in (1), explain whether or not the firm should decrease the price from $10 to $7 in order to increase its revenue.

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