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If the marginal revenue from a product is $15 and the price elasticity of demand is −1.2, what is the price of the product?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the marginal revenue from a product is $15 and the price elasticity of demand is −1.2, what is the price of the product?

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Anna owns the Sweet Alps Chocolate store. She charges $500 per pound for her hand made chocolate. You, the economist, have calculated the elasticity of demand for chocolate in her town to be 2.5. If she wants to increase her total revenue, what advice will you give her and why? Explain your answer.
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2: The price elasticity of demand for Nanay Flor's Photography is 0.5. If the %AQ=10%. What is the %AP? Why do you think nanay flor's service is inelastic? How can she maximize profit? 3: Mamon's bakery is famous for its Banana muffins. If they will increase the price from P10 to P15 and the price elasticity of supply is 1.5. How much will the %AQ? Suggest ways to maximize profit. 4: Company X developed a mobile application that could track monthly expenses of households. If the launching price is P500 and due to good response from the market the company strategist suggested to increase the price to P700.lf the %AQ= 30%. As the CEO, will you approve the price increase?