Homework Answers
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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