Answer to Question #67690 in Microeconomics for Lulama Majozi
If good’s demand is elastic (Ke>1), as it happens with laptops (Ke=2.0) , the price decreasing leads to quantity increasing in a greater extent, and total revenue rises. So, it is expediently to decrease the price for laptops.
If Ke=1, as it happens with USB drives, it doesn’t matter how the price changes: the quantity demanded changes in the same extent, and total revenue doesn’t change. So, there is no any difference whether to increase the price or reduce.
If good’s demand is inelastic (Ke<1), as it happens with external drives (Ke=0.53), the price decreasing leads to quantity increasing in a smaller extent, and total revenue falls, and vice versa. So, it is expediently to increase the price for external drives.
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