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What effect would a price increase have on the total revenue

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Reference no: EM132387949

LYFEN is considering adding another fruit-based product for which the demand has been estimated by the function Q = 7500 - 500PF +7I + 100PB, where PF is the price of LYFEN's proposed product, I is per capita income, and PB is the price of a similar product from one of the competing companies. Assume the initial values of PF, I, and PB are 60, ¥9,500, and 40. Given this information, answer the following based on your calculations of appropriate elasticities.

  1. What effect would a price increase have on the total revenues earned from the proposed product?
  2. What would you expect to occur to sales given an increase in personal income?
  3. What is the potential impact if the competing seller raises its price?

Reference no: EM132387949

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