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A retail store faces a demand equation for Roller Blades given by: Q = 180 - 1.5P, where Q is the number of pairs sold per month and P is the price per pair in dollars.
a. The store currently charges P = $80 per pair. At this price, determine the number of pairs sold.
b. If management were to raise the price to $100, what would be the impact on pairs sold? On the store's revenue from Roller Blades?
c. Compute the point elasticity of demand first at P = $80, then at P = $100. At which price is demand more price sensitive?
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