Sales are 3,100 at a price of $200 and 2,400 at a price of $300. Calculate the price of elasticities of demand using $200 as the base value; then use $300 as the base value. Calculate the arc price elasticity and compare the three calculations. How do your answers differ?
Sales are 3,100 at a price of $200 and 2,400 at a price of $300. Calculate the price of elasticities of demand using $200 as the base value; then use $300 as the base value. Calculate the arc price elasticity and compare the three calculations. How do your answers differ?
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1. What is price elasticity of demand when prices increase from $3 to $4 and quantity decrease from 90 cups to 70 cups?
2. Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:
| Price | Quantity Demanded by Business | Quantity Demanded by Vacationers |
| 150 | 2100 | 1000 |
| 200 | 2000 | 800 |
| 250 | 1900 | 600 |
| 300 | 1800 | 400 |
As the price of tickets rises from $200 To $250, what is the price elasticity of demand for a) business travelers and b) vacationers? Use the midpoint method to calculate. Why might vacationers have a diffeent elasticity from business travelers?
3. How can sellers utilize the price elasticity of demand for maximum total revenue?
