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The manager of a supermarket lowers the price of its 24-pack bottled water from $4.60 to $3.40 and as a result, sales of bottled water increases from 400-600 packs.
1) What is the arc price elasticity of demand for bottled water?
2) Give an economic interpretation to the numerical value obtained in question 1
3) Based on your answer to 1, would it have been appropriate to mark down price in order to increase total revenue? Why?
4) What are some of the applications (uses) of the concept of price elasticity of demand?
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