When the price is $6.00, the quantity demanded is 20.When the price is $9.00, the quantity demanded is 16.Calculate the price elasticity of demand. You must use the midpoint formula.Given the elasticity of demand, a 10% increase in price will cause quantity demanded to fall by what percentage? Explain your answer.Is this demand elastic or inelastic? Explain your answer.What is assumed about consumer income when you measure the price elasticity of demand?Walmart advertises that it has rolled back prices. If Walmart is rolling back prices to raise revenues, should it roll back prices on products that have a price elasticity of demand that is elastic or inelastic? Explain your answer.

The objective of the question is to calculate the price elasticity of demand using the midpoint formula, determine the percentage change in quantity demanded given a 10% increase in price, identify whether the demand is elastic or inelastic, understand the assumption about consumer income when measuring price elasticity of demand, and advise Walmart on whether to roll back prices on products with elastic or inelastic demand.First, let's calculate the price elasticity of demand using the midpoint formula. The formula is (Q2 - Q1) / ((Q2 + Q1) / 2) / (P2 - P1) / ((P2 + P1) / 2), where Q1 and Q2 are the initial and final quantities, and P1 and P2 are the initial and final prices. Substituting the given values, we get (16 - 20) / ((16 + 20) / 2) / (9 - 6) / ((9 + 6) / 2) = -4 / 18 / 3 / 7.5 = -0.37.Next, let's determine the percentage change in quantity demanded given a 10% increase in price. The formula is %ΔQ = E * %ΔP, where E is the price elasticity of demand, %ΔQ is the percentage change in quantity, and %ΔP is the percentage change in price. Substituting the given values, we get %ΔQ = -0.37 * 10% = -3.7%. Therefore, a 10% increase in price will cause quantity demanded to fall by 3.7%.Now, let's identify whether the demand is elastic or inelastic. If the absolute value of the price elasticity of demand is greater than 1, the demand is elastic. If it's less than 1, the demand is inelastic. If it's equal to 1, the demand is unit elastic. In this case, the absolute value of the price elasticity of demand is 0.37, which is less than 1. Therefore, the demand is inelastic.When measuring the price elasticity of demand, it is assumed that consumer income and the prices of other goods remain constant. This is because changes in these factors can also affect the quantity demanded, and we want to isolate the effect of price changes.Finally, if Walmart is rolling back prices to raise revenues, it should roll back prices on products that have a price elasticity of demand that is inelastic. This is because when demand is inelastic, a decrease in price leads to a less than proportionate increase in quantity demanded, resulting in an increase in total revenue.The price elasticity of demand is -0.37, indicating that a 10% increase in price will cause quantity demanded to fall by 3.7%. The demand is inelastic, and it is assumed that consumer income and the prices of other goods remain constant when measuring the price elasticity of demand. Walmart should roll back prices on products with inelastic demand to raise revenues.