Suppose an office supply store increased its price of file folders from $.79/box
ID: 1257398 • Letter: S
Question
Suppose an office supply store increased its price of file folders from $.79/box to $.99/box and the quantity demanded decreased from 85 boxes/month to 83 boxes/month. What is the price elasticity of demand for file folders? Is the demand elastic, unit elastic or inelastic? Calculate the change in toal revenue as a result of the price increase. What happens to the total revenue generated for the office supply store as a result of the price increase, and how does it show the relationship between elasticity and total revenue? If the price of a product were increased from $25 to $26 and quantity demanded fell from 10 to 9, calculate the price elasticity of demand. Is the demand elastic, unit elastic or inelastic. Calculate the change in total revenue as a result of the price increase. What happens to the total revenue generated for the office supply store as a result of the price increase, and how does it show the relationship between elasticity and total revenue?
Explanation / Answer
What is the price elasticity of demand for file folders?
$0.99 - 0.79 = $0.20
, unit elastic