One of South Africa’s cellphone operators, Cell C, is changing their overall business strategy. The focus is now on providing customers with “affordable and accessible services." To do this they need your economic expertise. They know that when price for premium services increases from R2/minute to R2.2/minute the demand for their services falls from 12 customers to 10 customers. a. Using the point formula calculate the price elasticity of demand. b. What type of elasticity does Cell C’s services have over this price range? Motivate your answer.
One of South Africa’s cellphone operators, Cell C, is changing their overall business strategy. The focus is now on providing customers with “affordable and accessible services." To do this they need your economic expertise. They know that when price for premium services increases from R2/minute to R2.2/minute the demand for their services falls from 12 customers to 10 customers. a. Using the point formula calculate the price elasticity of demand. b. What type of elasticity does Cell C’s services have over this price range? Motivate your answer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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One of South Africa’s cellphone operators, Cell C, is changing their overall business strategy.
The focus is now on providing customers with “affordable and accessible services." To do this
they need your economic expertise.
They know that when price for premium services increases from R2/minute to R2.2/minute the
demand for their services falls from 12 customers to 10 customers.
a. Using the point formula calculate the
b. What type of elasticity does Cell C’s services have over this price range? Motivate your
answer.
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