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1. Jaime owns a monopoly business selling sweatshirts. The demand for her product is given by:...

1. Jaime owns a monopoly business selling sweatshirts. The demand for her product is given by: Q = 2000 ‒ 15P. She is currently selling sweatshirts at P = $80. What is the price elasticity of demand when the price is P = $55? You will have to use the point elasticity formula. The price elasticity of demand at this price is ___________

A: -0.7

2. Consider your answer to the previous question. If Jaime wants to increase the revenue received by her firm, what should she do?

a )She should raise the price of her sweatshirts

b) She should lower the price of her sweatshirts (O)

c) She is already maximizing her revenue and should not change her prices

If I'm wrong, please fix it to correct answer!

business   economics   
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Answer #1

Ed=0.7

Since Ed<1,the demand is inelastic.

When demand is inelastic,a rise in price raises revenue as quantity demanded does not fall much .

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