Question
Assume that the price of bananas rises from $0.50 to $1.00 per pound and the quantity demanded falls from 1000 pounds to 600 pounds.
a- What is the price elasticity of demand for bananas?
b- Is this elasticity elastic or inelastic?
c- If the price of bananas were to increase by 20 percent, what would be the percentage change in the quantity demanded?
d- What happens to total revenue for banana sellers when the price of bananas increases? Explain your answer.