3. After seeing the result (from question 2), Cal decides to lower his price once again from $2.558 to $2.458 per gallon. Once again, volume sold increases and settles at 4,800 gallons per day. He is worried that any further price cut will cause the discount station across the street to also lower it price.

What is the price elasticity of demand?

Can the demand be characterized as price elastic, price inelastic, or neither?

By how much did revenues increase or decrease as a result of the change in price?

By how much did profits increase or decline? (Profit is revenue minus total cost.)

Table provided below

2. After seeing your analysis, Gal decides to lower the price c'Fgas from $2.758 to $2.558 per gallon. After this change. the volume sold increased to 4.400 gallons per day. He asksyou tn measure his business gains or losses as a result ofthis price change. Fixed costs are $438 per day. What is the price elasticity of demand? Can the demand be characterized as prioe elastic, prioe inelastic, or neither? By how much did revenues increase or decrease as a result ufthe change in price? By how much did prots increase or decline? [Prot is revenue minus total cost.) Answerouestion 2 below. 3. After seeing the result (from question 2), Cal decides to lower his pride onoe again from 52.558 to $1.458 per gallon. Once again, volume sold increases and settles at 4,300 gallons per day. He is worried that anyfurther price cut will cause the discount station across the street to also lower it prime. What is the price elasticity of demand? [an the demand be characterized as price elastic, price inelastic, or neither? By how much did revenues increase or decrease as a result of the change in price? By how much did prots increase or decline? (Prot is revenue minus total cost.) Quantity Price 36(1) 2.758 4400 2.558 Average Average '56 change 96 change Elasticity: By howrnuch did revenues increase ordecrease as a result ofthe change in price? By howrnuch did profits increase or decline? Gallons , VariableCost , total Cost Daily Prolit _ Revenue [price a , Fixed cost per , sold per Price allans) Cost per Gallon (cost per unit: da [Fixed+ [revenue- all day g volume) V Variable) costs) 3500 4400 swerque n 3 below. Quantity Price 4400 2.558 4800 2.458 Average Average '56 change '56 change By howrnuch did revenues increase nrdecrease as a result ofthe change in price? By howrnuch did profits increase or decline? Gallons _ VariableCost , total Cost Daily Prolit _ Revenue [price x _ Fixed cost per _ sold per Price ll ) Cost per Gallon [cost per unit: d [FIxEd+ [revenue- all a ans a day 3 volume) V Variable) costs) 4400 4800