Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $2.25 each, he sells 250. At a price of $1.75 each, he sells 300. Instructions: Use the midpoint method and round your answer to two dtimal places. Do not include a negative sign (-). a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? Inelastic O Elastic c. If demand had the same elasticity for a price decline from $1.75 to $1.25 as it does for the decline from $2.25 to $1.75, would cutting the price from $1.75 to $1.25 increase or decrease Danny's total revenue? Increase O Decrease
Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $2.25 each, he sells 250. At a price of $1.75 each, he sells 300. Instructions: Use the midpoint method and round your answer to two dtimal places. Do not include a negative sign (-). a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? Inelastic O Elastic c. If demand had the same elasticity for a price decline from $1.75 to $1.25 as it does for the decline from $2.25 to $1.75, would cutting the price from $1.75 to $1.25 increase or decrease Danny's total revenue? Increase O Decrease
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter6: Simple Pricing
Section: Chapter Questions
Problem 6.1IP
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![Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent
venture is selling homemade brownies that he bakes himself. At a price of $2.25 each, he
sells 250. At a price of $1.75 each, he sells 300.
Instructions: Use the midpoint method and round your answer to two dcimal places. Do
not include a negative sign (-).
a. What is the elasticity of demand?
4
b. Is demand elastic or inelastic over this price range?
Inelastic
Elastic
c. If demand had the same elasticity for a price decline from $1.75 to $1.25 as it does for
the decline from $2.25 to $1.75, would cutting the price from $1.75 to $1.25 increase or
decrease Danny's total revenue?
OIncrease
O Decrease](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F42a126bb-9497-41f3-aba1-f417c4f85af2%2F87387a2e-df4b-4a2a-8079-0053f604c88c%2Fb09175_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent
venture is selling homemade brownies that he bakes himself. At a price of $2.25 each, he
sells 250. At a price of $1.75 each, he sells 300.
Instructions: Use the midpoint method and round your answer to two dcimal places. Do
not include a negative sign (-).
a. What is the elasticity of demand?
4
b. Is demand elastic or inelastic over this price range?
Inelastic
Elastic
c. If demand had the same elasticity for a price decline from $1.75 to $1.25 as it does for
the decline from $2.25 to $1.75, would cutting the price from $1.75 to $1.25 increase or
decrease Danny's total revenue?
OIncrease
O Decrease
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