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Calculate the price elasticity of demand

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Reference no: EM133081136

Assist Adam, a local shop owner, in determining if he has made the right decision to raise prices by answering the following questions. He implemented a price increase from R3-00 to R7-00 and observed a resultant decrease in quantity demanded from 18 to 12 Mars bars in his weekly sales.

(a) Calculate the price elasticity of demand over the range of the linear demand curve for Mars bars.

(b) What does the elasticity coefficient reveal? Explain.

Reference no: EM133081136

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