Ask Question
29 March, 22:49

Tracey sells 100 gourmet cupcakes per day at $2 each. She is considering raising her price to $2.50 per cupcake in order to increase her revenues. If the price elasticity of demand for Tracey's cupcakes is 2, would she increase her revenues?

+2
Answers (1)
  1. 30 March, 01:47
    0
    no, revenues would fall because she far fewer cupcakes.

    Explanation:

    given data

    sells Q = 100

    cupcakes per day P = $2 each

    raising price P' = $2.50

    price elasticity of demand e = 2

    solution

    when here e > 1, price and TR move in opposite direction.

    when price is increase to $2.5, TR falls

    when Q falls more than rise in P

    so here no, revenues would fall because she far fewer cupcakes.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Tracey sells 100 gourmet cupcakes per day at $2 each. She is considering raising her price to $2.50 per cupcake in order to increase her ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers