Suppose that the price of cotton has increased from AED 100 per kilo to AED 150 per kilo. Suppose that the quantity demanded of this cotton was 450,000 tons in the market of cotton and after changing the prices of cotton this quantity is changed to 200,000 tons. 1- Calculate the PED (price elasticity of demand) ( 2- Is the demand in this market elastic or not? And why? 3- To increase the revenue of the seller, is it better to increase the price or decrease it? and why?

Suppose that the price of cotton has increased from AED 100 per kilo to AED 150 per kilo. Suppose that the quantity demanded of this cotton was 450,000 tons in the market of cotton and after changing the prices of cotton this quantity is changed to 200,000 tons. 1- Calculate the PED (price elasticity of demand) ( 2- Is the demand in this market elastic or not? And why? 3- To increase the revenue of the seller, is it better to increase the price or decrease it? and why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that the price of cotton has increased from AED 100 per kilo to AED 150 per kilo. Suppose that the
quantity demanded of this cotton was 450,000 tons in the market of cotton and after changing the prices of
cotton this quantity is changed to 200,000 tons.
1- Calculate the PED (price elasticity of demand) (
2- Is the demand in this market elastic or not? And why?
3- To increase the revenue of the seller, is it better to increase the price or decrease it? and why?

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