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Demand Schedule for Carls Car Company Quantity Sold (in millions) Price of Car (in $) $25,000 $20,000 30 50 Use the table ab
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Answer #1

a) revenue = 25000*30 = 750000
b) revenue = 20000*50 = 1000000

c) the company gains from lowering price as revenue increases after decrease in price. This implies automobiles are price elastic.

d) elasticity = (50-30)(25000+20000) / (20000-25000)(30+50)

= -900/400 = -2.25

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