Question

When a university bookstore prices chemistry textbooks at $200 each, it generally sells 120 books per month. If it lowers the price to $160, sales increase to 160 books per month. Given this information, we know that the price elasticity of demand for chemistry books is about____________. a. 1.29, and a decrease in price from $200 to $160 results in an increase in total revenue.b. 1.29, and a decrease in price from $200 to $160 results in a decrease in total revenue.c. 0.78, and a decrease in price from $200 to $160 results in an increase in total revenue.d. 0.78, and a decrease in price from $200 to $160 results in a decrease in total revenue.

Answer 1

Answer:

Ep=1.67

Elastic Demand

and a decrease in price from $200 to $160 results in an increase in total revenue

Explanation:

Ep=(% change in qty/% change in price*100)

(160-120/120)*100=33.3%

(160-200/200)*100= - 20%

Therefore

33.3/-20= /-1.67/

Take the absolute value

Ep=1.67