Many businesses employ pricing analysts who evaluate pricing practices and their profitability. Consider the case where a service's sales history shows that the percentage change quantity sold is always smaller in magnitude than the percentage change in price when the firm changes the service's price.

a. Is this good's demand price elastic, price inelastic, or unitary elastic? Assume all other factors are held constant when prices are changed. Include a formal definition of price elasticity of demand in your answer.

b. Based on the price elasticity of demand, what is the expected effect of a decrease in price on the profit the firm earns from this service? Explain.

c. Assuming that the marginal cost of producing this service does not equal zero, does setting price at a level where its price elasticity of demand equal -1 maximize the profits earned from this service? Explain your answer.