Question
I am just needing clarification (step by step, please) on how to arrive at answers (stated) for the following question. You sell car insurance to
I am just needing clarification (step by step, please) on how to arrive at answers (stated) for the following question.
You sell car insurance to low-income consumers. You have the cheapest rates in Texasjust $50 per monthand you have 100,000 identical customers. You estimate that the price elasticity of demand for your insurance is - 0.1.
____1%___ a. If you raise your prices by 10% ($5), what percent of your customers will you lose?
___1,000__ b. How many customers will you lose?
8.9%c. Your total monthly revenue will change by what percent? (Include + or - sign.)
_+$445,000_ d. Your total monthly revenue will change by what $ amount? (Include + or - sign.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started