Based on your recent market research, you think that your customers have a demand elasticity of -0.2 (at the mean of the prices you have charged them).

a. Last year you estimated that your customers were more price sensitive. What would be an example of an elasticity you could have obtained last year?

b. The mean price you have charged for your product is $20. For what range of prices is this this elasticity relevant?

c. Excited, your boss suggests raising prices by 15%. Should you consider this? Why or why not?