Posted by **Anonymous** on Monday, August 2, 2010 at 8:54pm.

) The demand curve for haircuts at Terry barnyards Hair Design is P=20-0.20Q

Where Q is the number of cuts per week and P is the price of a haircut. Terry is considered raising her price above the current price of $15. Terry is unwilling to raise price if the price hike will cause revenues to fall.

a) Should Terry raise the price of haircuts above $15? Why or why not?

b) Suppose demand for Terry’s haircuts increases to P=40-0.40Q. At a price of $15, should Terry raise the price of her haircuts? Why or Why not?

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