a) Price elasticity = 1.25
percentage change in price = [30-27/(30+27/2)] = [3/28.5] = 10.53%
Percentage change in quantity: 1.25= percentage change in Q/10.53
Percentage change in Q = 10.53*1.25 = 13.16%
The quantity will decrease by 13.16% to 1042
b) TR before = 1200*27 = 32400
TR after = 1042*30 = 31260
Revenue changes by 32400-31260 = 1140
c) Consmers are worse off as the equilibrium quantity decreases and price increases.
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