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Question: Amazoncom, the online bookseller, wants to increase its total revenue. One strategy is to offer a 10% discount on every book it sells. Amazoncom

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Question: Amazoncom, the online bookseller, wants to increase its total revenue. One strategy is to offer a 10% discount on every book it sells. Amazoncom knows that its customers can be divided into two distinct groups according to their likely responses to the discount. The accompanying table shows how the two groups respond to the discount. Amazon Sales before or after a discount GroupA Group B (Sales per week) (Sales per week) Volume of sales BEFORE the 10% discount 155 Million 1.50 Million Volume of sales AFTER the 10% discount 1.65 Million 1.70 Million a. Using the midpoint method, calculate the price elasticities of demand for group A and group B. b. Explain how the discount will affect total revenue from each group. c. Suppose Amazon.com knows which group each customer belongs to when he logs on and can choose whether or not to offer the 10% discount. If Amazoncom wants to increase its total revenue, should discounts be offered to group A or to group B, to neither group, or to both groups? Answer questions a, b, and c above (summarized below) A. Calculate the midpoint Price Elasticity of Demand for groups A and B. B. Explain how the discount will affect Total Revenue of each group. C. If Amazon wants to increase Total Revenue, should the discount be applied to group A or to group B to neither or to both

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