Price elasticity of demand (ED) and the total-revenue test

CALCULATE ED

a. ED = _____ Frito-Lay, Inc. reduces the price of its Lay's brand potato chips by 20%.

Consumers buy 40% more Frito Lay chips, ceteris paribus.

Given the price elasticity of demand in this case the price decrease

would _________________ total consumer expenditures on Lay's chips.

b. ED = ______ During the growing season the prices of apples fall by 40%.

Consumers buy 20% more apples, ceteris paribus.

Given the price elasticity of demand in this case the price decrease

would __________ total consumer expenditures on apples.

c. ED = 1 Assume the demand for golf in Lee County is unit price elastic.

Local public courses decrease their green fees, ceteris paribus.

The anticipated impact will be a(n) ______________ in the amount of golf played and a(n) ___________________in total revenue collected.