Compute the arc elasticity between two prices

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Question: Explain how a monopolistically competitive firm obtains its monopolistic status. A monopolistic firm is considering to decrease the price of its product from $15 to $12. According to the available data, the quantity demanded will rise from 1800 units to 2400 units. Using the midpoint method, compute the arc elasticity between two prices, $15 and $12. Based on the elasticity you computed, explain whether or not the firm should decrease the price from $15 to $12 in order to increase its revenue.

Reference no: EM132135648

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