1.1. Nile.com, the online bookseller, wants to increase its total revenue. One strategy is to offer a 10% discount on every book it sells. Nile.com knows that its customers can be divided into two distinct groups according to their likely responses to the discount. The accompanying table shows how the two groups respond to the discount

a. Using the midpoint method, calculate the price elasticities of demand for group A and group B.

b. Explain how the discount will affect total revenue from each group.

c. Suppose Nile.com knows which group each customer belongs to when he or she logs on and can choose whether or not to offer the 10% discount. If Nile.com wants to increase its total revenue, should discounts be offered to group A or to group B, to neither group, or to both groups?

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Volume of sales before the Group A (sales per week) 1.55 million Group B (sales per week) 1.50 million 10% discount Volume of sales after the 10% discount 1.65 million 1.70 million