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 $2.75 each, he sells 250. At a price of $2.25 each, he sells 300. Instructions: Use the midpoint method and round your answer to two decimal places. Do not include a negative sign (-) a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? O Inelastic O Elastic c. If demand had the same elasticity for a price decline from $2.25 to $175 as it does for the decline from $2.75 to $2.25, would cutting the price from $2 25 to $1.75 increase or decrease Danny's total revenue? O 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 $2.75 each, he sells 250. At a price of $2.25 each, he sells 300. Instructions: Use the midpoint method and round your answer to two decimal places. Do not include a negative sign (-) a. What is the elasticity of demand? b. Is demand elastic or inelastic over this price range? O Inelastic O Elastic c. If demand had the same elasticity for a price decline from $2.25 to $175 as it does for the decline from $2.75 to $2.25, would cutting the price from $2 25 to $1.75 increase or decrease Danny's total revenue? O Increase O Decrease

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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