Just a year after you launched the expansion of DWJ, inflation has raised your marginal cost by 7% from $198.33 to $212.21. Your elasticity varies for each of the three regions in which you sell your DWJ brand. In the southwestern region, your price elasticity of demand is -2.76. In your upper-western region, your price elasticity of demand is -3.50. In your New England- region, the price elasticity of demand is -5.76. Estimate the percentage change in quantity demanded if you were to raise prices in all three regions by 7%. (DO NOT INCLUDE THE NEGATIVE SIGN. CARRY ALL DECIMAL PLACES WHICH DOING THE CALCULATION, ROUND TO 1 DECIMAL WHEN ENTERING. I.E. 10.015 WILL ROUND TO 10.075 is 10.1) Use %Qd/%P = e to complete the estimate:

a. %Qd southwestern b. %Qd upper western c. %Qd New England

2) Your current prices are $311 in the Southwestern region; $278 in the western-region and $240 in the New England region. Your marginal cost is now $212.21. Given the predicted changes in quantity demanded by region per problem 1 using the stay even analysis %Qd = %P/[%P +((P-MC)/P)], can you raise prices by 7% in any of the regional markets? State your conclusion and then show the all the steps supporting your conclusion. (Note you are not being asked to compute the new price. CARRY ALL DECIMAL PLACES WHICH DOING THE CALCULATION, ROUND TO 1 DECIMAL WHEN ENTERING. I.E. 10.075 WILL ROUND TO 10.1)