Question 5 Suppose that you own a local chain of 10 grocery stores that sell oranges. (Assume that the grocery stores are all the same in terms of customer composition, products sold, etc.) You are interested in determining whether or not you are maximizing revenue on the oranges you sell. Devise a plan to calculate the arc elasticity of demand for the oranges. A. I would gather all the information that I have from previous orange sales for all 10 local chains of grocery stores. B. Create a survey for consumers about oranges. What data would you need? A. Find at least 2 different price points that oranges are sold at. B. Find out the quantity demanded at the different price points. How could you get that data? A. From oranges sold in the past. B. Surveys from consumers. How do you use the raw data to tell you If you're maximizing revenue? A. I would use the data by plotting the points on to a scatter plot graph. This would visually show you where you can maximize your revenue. B. I would then calculate the percentage in change for quantity demanded and Percentage in change of the price from the two different price points. This would allow me to then find the Elasticty of Demand from dividing: (%AQ)/(96AP) C. From there I would be able to determine if the Arc of the Demand curve is Elastic, Inelastic or Unit Elastic. D. Revenue = (Price)x(Quantity), Where the price is increasing by a lot and the quantity demanded is only decreasing by a little, the Revenue will then increase. If there is an Inelastic Demand Curve the Revenue will Increase. Revenue is maximized when | Ed | =1 (When the Price moves but Revenue remains the same.)