When Apple introduced the iPhone in 2007, it was one of the first smartphones to have a touch screen. You are a manager at a smartphone company similar to Apple and your company has quickly introduced its own smartphone with a touch screen.

a. Suppose your marketing department tells you that the demand curve for your smartphone is Qd = 9,900,000 - 19,000 * P2. The price is $650, and the predicted quantity demanded is 4,050,000. At that price and estimated quantity, what is the price elasticity of demand for your smartphone?

b. At a sales meeting, some of the participants ask you what would happen to total revenue if you raised the price by 2 percent. Do not calculate the change in revenue;

instead, just indicate whether your total revenue would rise, fall, or not change.

c. It’s now a few years later, and other companies, like HTC and Samsung, have introduced smartphones with touch screens. How did introduction of these new phones affect the price elasticity of demand for your touch-screen smartphone? Explain your answer.