## Related questions with answers

Question

The elasticity of a good is $E=2$. What is the effect on demand of:

(a) A $3 \%$ price increase?

(b) A $3 \%$ price decrease?

Find the exact price that maximizes revenue for sales of the product.

Solution

VerifiedAnswered 1 year ago

Answered 1 year ago

Step 1

1 of 5The revenue $R$ is the product of the selling price per unit ($p$) and the number of units sold ($q$):

$R=pq$

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