sapling learning Each scenario below gives some information

sapling learning Each scenario below gives some information about price elasticity of demand. For each, calculate the missing data, and determine if the price change under consideration will increase, decrease, or not change the firm\'s total revenue Honest Abe\'s Used Cars estimates the price elasticity of demand for their cars to be -2.6 Last month, Abe tried a new marketing scheme which decreased the number of cars sold by 57% Abe must have O increased prices by Number O decreased Abe\'s total revenue increased O did not change O decreased At Webs-R-Us, a website design company, the new manager has decided to increase the price of Webs-R-Us services by 45%. If Webs-R-Us has a price elasticity of demand at -0.70, we can expected the number of websites designed to and total revenue to decrease O decrease by Number increase increase O not change

Solution

Answer to Question:1

1. Increased

2. 21.92% (Explanation: 2.6 = 57% / % change in price.So, % change in price = 57/2.6 = 21.92)

3. Decreased

Answer to Question:2

1. Decreased

2. 31.5% (Explanation: 0.70 = % change in quantity /45%.So, % change in quantity = 45 x 0.70 = 31.5)

3. Increase