1. Data for the market for graham crackers is shown below. Calculate the elasticity of demand between the following prices.
|
Price of crackers
|
Quantity Demanded (per month)
|
|
$3
|
80
|
|
$2.5
|
120
|
|
$2
|
160
|
|
$1.5
|
200
|
|
$1
|
240
|
$1.00 - $1.50: ___________________________________
$1.50 - $2.00: ___________________________________
$2.00 - $2.50: ___________________________________
$2.50 - $3.00: ___________________________________
If the price of graham crackers is $2.50 should firms raise or lower their prices if they want to increase revenue? Explain this in terms of elasticity.