Problem
Percentage change in quantity = 20%
Percentage change in price = 60%
Price elasticity = 33.3%
Percentage change of quantity
= (80-100)/100
= 20/100
= 0.2 or 20%
Percentage change of price
= (400-250)/250
= 150/250
= 0.6 or 60%
Price elasticity
= 20%/60%
= 0.333 or 33.3%
Using the numbers above. Calculate the price effect and the quantity effect in terms of their impact on the pharmaceutical firm's total revenue when the price goes up.