Suppose for some firm, 104 units were sold at the initial price of $20 and after...

 

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Suppose for some firm, 104 units were sold at the initial price of $20 and after the price rose, 96 units were sold at the new price of $30. Compute the price elasticity of demand and interpret the result. 2. Returning to your computation in #1, will revenue have increased or decreased as a result of that price change? On the basis of this information do we know enough to assess whether the price change was a wise decision for the firm? Explain. 3. Ben purchases 30 gallons of gasoline each week. When the price of gasoline was $3.04 per gallon, Ben purchased 30 gallons of gasoline. When the price of gasoline rose to $4.34 per gallon, Ben purchased 30 gallons of gasoline. Use price elasticity of demand to describe Ben's demand for gasoline. What might be some reasons for why demand for gasoline might behave like this? Suppose for some firm, 104 units were sold at the initial price of $20 and after the price rose, 96 units were sold at the new price of $30. Compute the price elasticity of demand and interpret the result. 2. Returning to your computation in #1, will revenue have increased or decreased as a result of that price change? On the basis of this information do we know enough to assess whether the price change was a wise decision for the firm? Explain. 3. Ben purchases 30 gallons of gasoline each week. When the price of gasoline was $3.04 per gallon, Ben purchased 30 gallons of gasoline. When the price of gasoline rose to $4.34 per gallon, Ben purchased 30 gallons of gasoline. Use price elasticity of demand to describe Ben's demand for gasoline. What might be some reasons for why demand for gasoline might behave like this?

Answer rating: 100% (QA)

1To compute the price elasticity of demand we use the formula Price Elasticity of Demand Percentage Change in Quantity Demanded Percentage Change in P... View the full answer