Estimate the price elasticity of demand for your product

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Reference no: EM131193650

You are Larry, the owner of Larry’s Lemonade Shack. You decide to hire an economist to estimate the price elasticity of demand for your product, which she estimates to be 2.5 (in absolute value). She also finds that this has been fairly stable over the last year.

a. Are you profit maximizing, or do you need more information (and if so, what information)? Explain your answer.

b. To increase revenue, should you raise or lower the price of your product or do you need more information (and if so, what information)?

Reference no: EM131193650

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