Danny “dimes” donahue is a neighborhood’s 9-year-old entrepreneur. his most recent venture is selling homemade brownies that he bakes himself. at a price of $2.5 each, he sells 250. at a price of $2 each, he sells 300. instructions: round your answer to 1 decimal place. a. what is the elasticity of demand? . b. is demand elastic or inelastic over this price range? . c. if demand had the same elasticity for a price decline from $2 to $1.5 as it does for the decline from $2.5 to $2, would cutting the price from $2 to $1.5 increase or decrease danny’s total revenue? .

A) Price elasticity of demand (PED) = 1

B) the PED is unitary

C) Danny's total revenue will decrease to $562.50

Explanation:

A) the formula for calculating price elasticity of demand is:

PED = % change in quantity demanded / % change in price

PED = 20% / 20% = 1

B)  the PED is unitary, it means that for every 1% change in the price, the demand will inversely change in 1%

C) since Danny lowered its price 20% from $2.50 to $2, he sold 20% more brownies, but his total revenue fell from $625 to $600. If he lowers his price even more, this time 25% to $1.50, his total sales will increase to 375 brownies, but his total revenue will continue to fall to $562.50

answer; realistic job preview;