Part a: A 20% increase in the price of a certain Product causes a 10% decrease in the quantity demanded.

Is the demand for that Product Elastic____ or Inelastic_____?

What is the Elasticity of Demand of this product_____? Please show your calculations.

Part b:The Elasticity of Demand of a certain Product is 0.4If there is a 20% increase in price, the quantity demanded willincrease___ or Decrease____?

By what percent will the quantity change?____% Please show your calculations.

Part c: We are looking at two businesses, Company A and Company B.Company A lowers its price of its product by 6% and sees an increase of about 12% in revenues.Company B tries a similar move:it lowers its price by 6% but sees its revenues go down by 3%.

Using the concept of Elasticity, explain why company A and Company B are getting such different results.