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. Question: What recommendations can you make to increase total revenue?

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. Question: What recommendations can you make to increase total revenue?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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26) Larry's Carpet Cleaners can influence demand by advertising. Larry charges $50 per carpet, and he cleans 150 carpets per month. The price elasticity of demand is -4, and Larry spends $500 per month on advertising. If Larry is maximizing profits, calculate the advertising elasticity of demand.
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