for one of their car models to be fairly inelastic, (-0.30); hence suggested price increase of 20 percent. In this case, work out the revenue effect if car price is raised from P1.2 M to P1.4 M. Should the management accept this suggestion? Comment.
2) Last day the price of a piece of cheese hamburger was
P50, and May was willing to buy 10 pieces. Today, the price has gone up to P65 each and May is now willing to buy 8 pieces. Is May’s demand for cheese hamburger elastic or inelastic? What is May’s elasticity of demand? 3) If May’s elasticity of demand for cheese hamburger is constantly 0.9, and he buys 10 pieces of cheese hamburger when the price is P50 per cheese hamburger, how many will she buy when the price is P65 per cheese hamburger? 4) May advertises to sell cookies for P200 a dozen, and decides that she can charge more. She raises the price to P300 a dozen and sells 40 dozens. What is the elasticity of demand? Assuming that the elasticity of demand is constant, how many would she sells if the price will be P500 a dozen?