Apply the total revenue test to determine demand elasticity
Utilize the determinants of elasticity to form a judgement on the elasticity of an item
Create a claim, evidence, and reasoning on elasticity based upon information provided in an article
A. Total Revenue Test – Brace Map in Notebook
Fareed sells falafel sandwiches. He charges $4.00 a sandwich and usually sells 100 a day. He recently decided to increase the price of a sandwich to $4.80 and is currently selling 75 sandwiches a day. Use the total revenue test to determine if his falafel sandwiches are elastic or inelastic. Show your work.
Based upon your answer, what market conditions may exist that would support your findings.
B. Determinants of Elasticity (List) See Figure 4.6