Table 4.1 -Refer to Table 4.1.Suppose You Own a Bookstore.You Believe That

question 107

Multiple Choice

Table 4.1
-Refer to Table 4.1.Suppose you own a bookstore.You believe that you can sell 40 copies per day of the latest John Grisham novel when the price is $35.You consider lowering the price to $25 and believe this will increase the quantity sold to 50 books per day.Compute the price elasticity of demand using the mid-point formula and these data.Select the correct implication from your work.

• A)The demand for the John Grisham book is inelastic.Revenue will fall if the price is lowered.
• B)The demand for the John Grisham book is elastic.Revenue will rise if the price is lowered.
• C)The demand for the John Grisham book is inelastic.Revenue will rise if the price is lowered.
• D)The demand for the John Grisham book is elastic.Revenue will fall if the price is lowered.

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