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Jane is named head of business strategy for a given business. The price elasticity of demand for the products (or services) sold by this business is 0.7. Jane is told that she must increase total revenue generated by the firm.
1. Describe a good or service that might have a price elasticity of around 0.7 (you don't need to look something up, you just need to justify why the good you chose COULD have this elasticity). Describe what you chose and why it might have a .7 price elasticity.
2. Describe what a .7 means in terms of a change in price and the responding change in quantity demanded for the good or service.
3. What could Jane do to increase total revenues for her firm if she had no control over costs (e.g., reducing costs is not an option)?
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