Answer:
revenue falls by $167,005.08
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
When elasticity of demand is less than 1, demand is inelastic
Demand is inelastic if a small change in price has little or no effect on quantity demanded.
change in percentage demanded when price falls by 11% = 11% x 0.6 = 6.6%
Quantity demanded increases by 6.6%
Increase in quantity demanded = 18,100 x 1.066 = 19,294.60
decrease in price = 0.89 x $180 = $160.20
change in total revenue
(180 x 18,100 ) - ( $160 .20 x 19,294.60)
= 3,258,000 - 3,090,994.92
=167,005.08
