The question is from Busi 100 Micro Foundations of Real Estate Economics

6. OfficeForce, a company that sells commercial real estate, needs to increase total revenue by year-end. One strategy is to discount the price of office space in a commercial building by 3%. The research team at OfliceForce has divided its prospective customers into two groups according to their likely responses to the discount: Small Businesses Government Services Percent Change in Quantity Demanded of ofce floor space +2% +10% (square feet) after discount (3) Calculate the price elasticities of demand for small businesses and government services. (2 marks) (b) Which business has inelastic demand? Which business has elastic demand? Explain how the discount will affect total revenue from each group. (4 marks) (c) If OfficeForce wants to increase its total revenue, should discounts be offered to small businesses or government services, to neither group, or to both groups? (2 marks)