If price of graham crackers is 250 must firms raise or

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Reference no: EM13394251

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.

Assume the competitive market shown below faces a short run price of $10. Using the graph below, identify the following:

Profit maximizing output:

Approximate mark up over cost

In the long run, the price falls to $7.50. Why does this happen?

What is the new profit maximizing output?

Reference no: EM13394251

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