Need 15 answered

5. What price maximizes total revenue? 15. Your friend Jenny owns a Bagel shop. She has noticed that when she changes prices she sees a change in the amount she sells. You think to yourself, as an awesome Econ student, "duh, that's the law of demand." Since, she knows that you are a smart student she poses the following plan to you. She says that when she reduces her prices on bagels from $5.00 to $4.00 she increases her sales from 100 bagels a day to 300 bagels a day. That's a lot more bagels sold. She wants to sell a lot of bagels so she thinks well why don't test out different prices. So she lowers the price again from $4.00 to $3.00 and sells 500 bagels. Then she lowers the price again from $3.00 to $2.00 and sells 700 bagels. Finally, she lowers the price from $2.00 to $1.00 and sells 1000 bagels. "Great" she says and is thrilled about selling 1000 bagels a day. You tell her "hold your horses Jenny" this is not a good thing. Explain to Jenny the following: a) Her total revenue at $4.00: b) Her total revenue at $1.00: c) The best price for her to maximize total revenue: d) How does her elasticity of demand change as she decreased her prices? e. Elasticity at $4.00: f. Elasticity at $3.00: g. Elasticity at $2.00: h. Elasticity at $1.00: |) Why does the price elasticity of demand decrease as she drops her price