Suppose the price decreases from RM6 to RM4 and quantity increases from 80

units to 90 units.

(a) Using the midpoint approach, calculate the price elasticity of demand.

(b) Interpret the coefficient that you obtained in part (a).

10. Suppose a seller increases the price of cakes from RM10 to RM12. This

causes the quantity demanded to fall from 580 units to 500 units.

(a) Using the midpoint approach, calculate the price elasticity of demand

for cakes.

(b) If the seller's objective is to increase total revenue, should he increase

the price? Why?