Problems: Determine if changing the price will influence the quantity sold. State whether the result is elastic of demand, inelastic of demand, or unitary of demand. These definitions are in your textbook (Chapter 13). For each of these problems: 1) Calculate the results of the problem. Show your solution. 2) State whether the situation is elastic of demand, inelastic of demand, or unitary of demand. 3) In your own words, tell us what that means. #2 Denim jeans Q1 = 75,000 jeans Q2 = 112,000 jeans P1 = $75.00 P2 = $50.00 #1 Pocket T-shirts Q1 = 50,000 T-shirts Q2 = 48,500 T-shirts P1 = $8.00 per shirt P2 = $12.00 per shirt

ELASTICITY PROBLEMS: You do not need to respond to these questions. These are the kinds of questions though that marketers are faced with when working with the economic concept of demand and making decisions with where to price the product/service. QUESTION: If I raise my price, will I increase my revenues, or will our torget market be too sensitive to the price increase, resulting in a significont reduction in revenues? QUESTION: If I increose or decrease my price, will the proportionate change in price result in a greater proportionate change in quontity demanded? The Formula: If E>1, then a proportionate change in price, produces a greater proportionate change in the quantity demanded. This means that the product you are selling is price elastic of demand. This can me a price increase or a price decrease. If E