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Answer to Question #64192 in Microeconomics for Saifa Sodhi

Question #64192
Compute the price elasticity of demand if price increases from $10 to $12 and quantity demanded falls from 600 to 400. Use the value obtained and a specific example to determine whether price must be increased or decreased to increase total revenue. Explain why. Note: Explain only how to increase total revenue, not decrease it.
Expert's answer
E p =((400-600)/600)/((12- 10)/10)=-1.666

Using this particular case that an increase in price, the quantity demanded falls, and a total

income falls, it is to increase its own income should be reduced at this equilibrium price

elasticity of the price.

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