ECN 2020 Lecture 5: SET 5
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A sporting goods store has estimated the demand curve for brand a running shoes as a function of price. Use the diagram to the right to answer the following questions. Calculate demand elasticity using the midpoint formula between each set of points given below. (enter your responses rounded to two decimal places and include a minus sign if necessary. ) Demand elasticity between points a and b is. If the store currently charges a price of , then increases that price to , what happens to total revenue from shoe sales? total revenue falls. If the store currently charges a price of , then increases that price to , what happens to total revenue from shoe sales? total revenue remains constant. If the store currently charges a price of , then increases that price to , what happens to total revenue from shoe sales? total revenue rises.