This analysis assessment has three parts. While responding to each part, make sure that you show the formula prior to your complete calculation. Listing only the final answer will not earn credit.
Part I. Using the midpoint method, calculate and interpret the price elasticity of demand for the following situation:
When the price of oranges increases from $1.00 per pound to $1.50 per pound, quantity demanded falls from 500 pounds to 400 pounds. Calculate the price elasticity of demand.
Is the demand for oranges price elastic, inelastic, or unit elastic? Explain.
Calculate total revenue before and after the price change. How does that relate to the elasticity interpretation?