Edit View History rks People Window Help 73 Thu 657 ofcx G 7

Edit View History rks People Window Help 73% ,Thu 6:57 ofcx G 7/10 pts Rober x Secure https://goformative.com/formatives/migrated.8579436/view 2 3 4567 8 9 10 11 12 Robert finds that when he raises the price of his handmade shoes 596, the total mops number of shoes he sells decreases by 10%. What would you tell Robert about 6 his elasticity of demand and what he should do if he is concerned about his total revenue? 7 Pine Summit is a golf course with very large hills. The owner calculates the no ps elasticity of demand for golf carts to be .85. What should the owner do if he wants to increase his total revenue from golf carts.

Solution

6) We find the elasticity of demand = % change in Quantity demanded /% chnge in Price =

Elasticity = 10/5 = 2. This implies that demand is elastic . So Robert should cut down prices so as to increase revenue.

7) Given the elasticity =0.85. The elasticity is less than 1 implies demand is inelastic. Pine summit should increase the price so as to increase the revenue.