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Price elasticity of demand for electricity

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Q.1. Answer the following questions about demand elasticity.

(a) What will be the price elasticity of demand for electricity be in the following situations (choose from inelastic, elastic, elastic)? Explain with rationale in

i) The electric company increases the price of per unit of electricity for household consumption by 20%.

ii) An electric kitchen stove making company increases the price of per unit of its product by 20%.

(b) Sunrise Machines is a manufacturer of laser printers. It current market price is Rs. 9000. It is considering lowering its price to Rs. 6000. The company has calculated that in this range of price the price elasticity of demand is (-2). Right now the company sells 1200 units of print

i. What will be the new quantity sold?

ii. What will be the new TR and change in TR?

iii. What additional information is needed to determine the firm profitability at the new price level?

Reference no: EM132559193

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