Calculate the own price elasticity of demand
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A restaurant that goes by the name Soft Rock Cafe is contemplating a T-shirt advertising promotion. Monthly sales data from T-shirt shops marketing the "Barry Manilow Eats at Soft Rock" design indicate that the demand curve for the T-shirts can be described as:
Q = 4,000 - 500P where Q is T-shirt sales and P is price. -v
a. How many T-shirts could the cafe sell at $5 each?
b. What price would Soft Rock have to charge to sell 2,000
T-shirts?
c. Calculate the own price elasticity of demand when the price goes
from $5 to $4.
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Solution Summary
Calculate the own price elasticity of demand in this case.
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