Compute the own price elasticity of demand

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Important information about own price elasticity of demand

A bike shop that goes by the name of Crash and Burn is contemplating a backpack advertising promotion. Monthly sales data from backpack shops marketing the "Crash and Burn" design indicate that the demand curve for the T-shirts can be described as:

Q = 4,000 - 500P (where Q is backpack sales and P is price).

a.How many T-shirts could the cafe sell at $5 each?

b.What price would Crash and Burn have to charge to sell 2,000 T shirts?

c.Calculate the own price elasticity of demand when the price goes from $5 to $4.

 

Reference no: EM1328667

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