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November 27, 2014

Homework Help: economics

Posted by april on Friday, February 12, 2010 at 1:12am.

Calculate the mid-point elasticity of demand. Please review chapter 6 before taking this assignment. Question: The online bookseller wants to increase its total revenue by offering 10% discount on every book it sells.Its custmers are divided in 2 groups Group A and group B Volume of sales before the discount for Group A= sales for $1.55 million per week and for the Group B= sales for $ 1.50 million per week After the discount of 10% the volume of sales for the Goup A = $ 1.65 million and for the Group B= $1.70 million per week a) Using mid-point method,calculate the price elasticity of Demand both for group A and Group B ( 10 points) b)Explain how the discount will affect the total revenue in each group ( 10 points)

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