N5

In your convenience store you have calculated that the elasticity of demand for fountain drinks is 0.24. You currently price a large fountain drink at $1.79 and sell 148 of them per day. You are considering raising the price by 10%. What is the expected impact on number of units sold and revenue to increasing the price? Assuming your costs (drink, cup, straw, etc.) have not changed before and after the price change what is the anticipated impact on profits of increasing fountain drink prices?