Placeholder

ECON 361 Calculate the price elasticity of demand

$2.00

Quantity:

Product Description

ECON 361 Calculate the price elasticity of demand

Ali’s Gyros operates near a college campus. Ali has been selling 120 gyros a day at $4.50 each and is considering a price cut. He estimates that he would be able to sell 200 gyros per day at $3.50 each.

a.      Calculate the price elasticity of demand using the midpoint formula.

b.      Calculate the change in revenue as a result of the price cut.