A newspaper recently lowered its price from 50 cents to 30 cents. As it did, the...
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A newspaper recently lowered its price from 50 cents to 30 cents. As it did, the number of newspapers sold increased from 240,000 to 280,000 (Use the arc- elasticity formula). a. What was the newspaper's elasticity of demand? b. Given that elasticity, did it make sense for the newspaper to lower its price? c. What would your answer be if much of the firm's revenue came from advertising and the higher the circulation, the more it could charge for advertising? A newspaper recently lowered its price from 50 cents to 30 cents. As it did, the number of newspapers sold increased from 240,000 to 280,000 (Use the arc- elasticity formula). a. What was the newspaper's elasticity of demand? b. Given that elasticity, did it make sense for the newspaper to lower its price? c. What would your answer be if much of the firm's revenue came from advertising and the higher the circulation, the more it could charge for advertising?
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To calculate the elasticity of demand using the arcelasticity formula well use the following formula ... View the full answer
Related Book For
Macroeconomics Principles, Applications, and Tools
ISBN: 978-0132555234
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
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