Give typed solution full explanation Don't upload any type of photos QUESTION 10 (4 Marks) Suppose that
Question:
Give typed solution full explanation
Don't upload any type of photos
QUESTION 10 (4 Marks) Suppose that you are the managing director of Linen Factory that produces duvet covers, fitted sheets and pillows. The price elasticity of the demand for duvet covers is 2,5; for fitted sheets is 1,0; and for pillows is 0,5. Linen Factory is experiencing serious cash flow problems and you have to increase total revenue as soon as possible. You are in a position to set the prices for these goods. Which of the following pricing strategy is CORRECT? a) The demand for duvet covers is inelastic. To increase the total revenue from the sale of duvet covers the price of duvet covers should thus be decreased. b) The demand for fitted sheets is unitarily elastic. Total revenue will increase. The price of fitted sheets should therefore be increased. c) The demand for pillows is inelastic. To increase the total revenue from the sale of pillows, the price of pillows should be increased. d) The demand for duvet covers is perfectly inelastic. To increase the total revenue from the sale of duvet covers the price of duvet covers should thus be decreased