Calculate the price elasticity of demand

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Reference no: EM131196087

ECONOMICS ASSIGNMENT-

ASSIGNMENT QUESTIONS - The Independent Newspaper is one of the leading newspaper publishing companies in South Africa. They publish both the daily and weekly newspapers. They are considering increasing the subscription price for one of their leading weekly newspaper in KwaZulu Natal. However, after doing some research, they find out that in Western Cape and Limpopo, provinces similar to KwaZulu Natal and in many ways, the Newspaper sales dropped from 100,000 to 25,000 when the price was increased from R25 to R40.

1. Calculate the price elasticity of demand when the price was increased from R25 to R40.

2. Is a price increase the correct decision to raise revenue? Substantiate your answer using the price elasticity of demand and income elasticity of demand concepts.

3. Using examples explain how demand, price elasticity, and total revenue are all related to each other. Explain this relationship using at least two examples that incorporates all three concepts.

4. Evaluate the various factors that affect the price elasticity of demand. Justify your answer.

Reference no: EM131196087

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