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15 August, 12:57

Suppose the price elasticity of demand for fishing lures equals 1.5 in South Carolina and 0.63 in Alabama. To increase revenue, fishing lure manufacturers should: a. lower prices in each state. b. raise prices in each state. c. lower prices in South Carolina and raise prices in Alabama. d. leave prices unchanged in South Carolina and raise prices in Alabama.

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  1. 15 August, 15:17
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    A

    Explanation:

    In this question, we are asked what should be done to increase revenue, given the price elasticity of demand for fishing in the two places.

    We answer the question as follows:

    The value of 1.5 shows that the price elasticity of demand for fishing in South Carolina is elastic. This means a decrease in price will lead to revenue increase

    Also, If price elasticity of demand is 0.63, then an increase in the price will lead to revenue decrease in Alabama.

    Hence it can be said that if the price elasticity of demand for fishing lures equals 1.5 in South Carolina and 0.63 in Alabama.

    To increase revenue, fishing lure manufacturers should lower prices in South Carolina and raise prices in Alabama.

    Hence option a is the correct Option
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