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? If a business firm drops the prices of its product by 3 percent and the decision leads total revenue increase for the firm, then the price elasticity of demand of its customers for the product could possibly be PED-.99 PED=1 PED=.78 ÞED=.24 PED=2.4

? If a business firm drops the prices of its product by 3 percent and the decision leads total revenue increase for the firm, then the price elasticity of demand of its customers for the product could possibly be PED-.99 PED=1 PED=.78 ÞED=.24 PED=2.4

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I can't figure out an answer to this question that I'm confident with. I understand that if decreasing the price results in a revenue increase, that the good is somewhat elastic, but I don't understand where the number choices in the answer come from. I know that unit-elastic is 1 and perfectly inelastic is 0 but I can't determine how that applies here. 

? If a business firm drops the prices of its product by 3 percent and the decision leads total revenue increase for the firm, then the price elasticity of demand of its customers for the product could possibly be PED-.99 PED=1 PED=.78 ÞED=.24 PED=2.4
Transcribed Image Text:? If a business firm drops the prices of its product by 3 percent and the decision leads total revenue increase for the firm, then the price elasticity of demand of its customers for the product could possibly be PED-.99 PED=1 PED=.78 ÞED=.24 PED=2.4
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