Answer to Question #143883 in Finance for Mr. Dinesh Pal Singh

Question #143883
34. Sailright Inc. manufactures and sells sailboards. Management believes that the price elasticity of demand is – 3.0. Currently, boards are priced at $500 and the quantity demanded is 10,000 per year.
(a) If the price is increased to $600, how many sailboards will the company be able to sell each year?
(b) How much will total revenue change as a result of the price increase?
1
Expert's answer
2020-11-19T06:45:55-0500

(a) If the price is increased to $600, how many sailboards will the company be able to sell each year?

Change in price (600-500)/500 =

Elasticity of demand = -3

Change in quantity demanded =

Quantity demanded =

(b) How much will total revenue change as a result of the price increase?

Total revenue = Price * Quantity

TR = = $ 3,600,000

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