Problem 1: Price Elasticities and Revenue

A company has experimented with 4 different prices.

At a price of $19, 36 percent of potential customers purchase. And so on.

price	quantity	% price	% quantity	% quantity /% price	revenue
$19	0.36	e.g., (39-19)/19	e.g., (0.32-0.36)/0.36
$39	0.32
$59	0.27
$99	0.24

1. Calculate the percent change in price as price rises, for example, from $19 to $39.

1. Calculate the percent change in quantity as the price rises, for example, from $19 to $39.

1. Calculate the implied price elasticity estimate (% quantity /% price) between each successive price.

1. Calculate the revenue (per customer) at each price.

1. What are your thoughts about the revenue maximizing price?