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A local electronics store sells iPods for $100 per unit. The manager who took a lesson from his economics course in college decides to offer a 20 percent discount to students who can present their current student ID at purchase. Given the demand curves for regular and student customers, answer the following questions. a. What will be the total revenue (dollars generated from iPod sales) for both groups of customers if the store offers the discount? b. For which group of customers is the demand more elastic? c. What is the elasticity of demand between the prices of $100 and $80 in the regular market? (Round to 2 decimal places.) d. What is the elasticity of demand between the prices of $100 and $80 in the student market? (Round to 2 decimal places.) e. If the manager increases the regular price of iPods to $120 and lowers the student discount price to $70, how much could the store increase total revenues?

A local electronics store sells iPods for $100 per unit. The manager who took a lesson from his economics course in college decides to offer a 20 percent discount to students who can present their current student ID at purchase. Given the demand curves for regular and student customers, answer the following questions. a. What will be the total revenue (dollars generated from iPod sales) for both groups of customers if the store offers the discount? b. For which group of customers is the demand more elastic? c. What is the elasticity of demand between the prices of $100 and $80 in the regular market? (Round to 2 decimal places.) d. What is the elasticity of demand between the prices of $100 and $80 in the student market? (Round to 2 decimal places.) e. If the manager increases the regular price of iPods to $120 and lowers the student discount price to $70, how much could the store increase total revenues?

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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A local electronics store sells iPods for $100 per unit. The manager who took a lesson from his economics course in college decides to offer a 20 percent discount to students who can present their current student ID at purchase. Given the demand curves for regular and student customers, answer the following questions. a. What will be the total revenue (dollars generated from iPod sales) for both groups of customers if the store offers the discount? b. For which group of customers is the demand more elastic? c. What is the elasticity of demand between the prices of $100 and $80 in the regular market? (Round to 2 decimal places.) d. What is the elasticity of demand between the prices of $100 and $80 in the student market? (Round to 2 decimal places.) e. If the manager increases the regular price of iPods to $120 and lowers the student discount price to $70, how much could the store increase total revenues?
Transcribed Image Text:A local electronics store sells iPods for $100 per unit. The manager who took a lesson from his economics course in college decides to offer a 20 percent discount to students who can present their current student ID at purchase. Given the demand curves for regular and student customers, answer the following questions. a. What will be the total revenue (dollars generated from iPod sales) for both groups of customers if the store offers the discount? b. For which group of customers is the demand more elastic? c. What is the elasticity of demand between the prices of $100 and $80 in the regular market? (Round to 2 decimal places.) d. What is the elasticity of demand between the prices of $100 and $80 in the student market? (Round to 2 decimal places.) e. If the manager increases the regular price of iPods to $120 and lowers the student discount price to $70, how much could the store increase total revenues?
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