Question: Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $2.5 each, he sells 250. At a price of $2 each, he sells 300.
Instructions: Round your answer to 1 decimal place.
a. What is the elasticity of demand? .
b. Is demand elastic or inelastic over this price range? (Click to select)ElasticInelastic.
c. If demand had the same elasticity for a price decline from $2 to $1.5 as it does for the decline from $2.5 to $2, would cutting the price from $2 to $1.5 increase or decrease Danny's total revenue? (Click to select)DecreaseIncrease.