An online retailer is considering offering a 10% discount on a range of products to increase its total revenue. It 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. Group A Group B Volume of sales/week before the 10% discount 1.55 million 1.50 million Volume of sales after the 10% discount 1.65 million 1.70 million 1 Calculate the price elasticities of demand for group A and group B. 2 Explain how the discount will affect total revenue from each group. 3 Suppose the retailer knows which group each customer belongs to and can choose whether to offer the 10% discount. If the retailer wants to increase its total revenue, should it offer discounts to group A only, group B only, to neither, or to both? Why? An online retailer is considering offering a 10% discount on a range of products to increase its total revenue. It 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. Group A Group B Volume of sales/week before the 10% discount 1.55 million 1.50 million Volume of sales after the 10% discount 1.65 million 1.70 million 1 Calculate the price elasticities of demand for group A and group B. 2 Explain how the discount will affect total revenue from each group. 3 Suppose the retailer knows which group each customer belongs to and can choose whether to offer the 10% discount. If the retailer wants to increase its total revenue, should it offer discounts to group A only, group B only, to neither, or to both? Why