1) When Apple raised the price of a song download from 99 cents to $1.29, demand for Grizzly Pioneer's latest hit fell to 90,000 units sold from 110,000 units sold in the previous week.
A) What is average price? What is average quanity sold?
B) Using average price as the base value, what is the percent change in price? Using average quanity as the base value, what is the percentage change in quanity sold?
C) Calculate the song's ARC elasticity of demand?
D) Is demand for the song elastic or inelastic? Explain.
E) Does sales revenue increase, decrease, or stay the same as a result of the price increase? How does your answer relate to your answer in D? Explain.