A sporting goods store has estimated the demand curve fo
Question and Solution
A sporting goods store has estimated the demand curve for a popular brand of running shoes as a function of price. Use t
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A sporting goods store has estimated the demand curve for a popular brand of running shoes as a function of price. Use the diagram to answer the questions that follow. a. Calculate demand elasticity using the midpoint formula between points A and B, between points C and D, and between points E and F.b. If the store currently charges a price of $50, then increases that price to $60, what happens to total revenue from shoe sales (calculate P Q before and after the price change)? Repeat the exercise for initial prices being decreased to $40 and $20, respectively. c. Explain why the answers to a. can be used to predict the answers to b.
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