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

% change in quantity demanded = (300 - 250) / 250 = 50 / 250 = 20%% change in price = ($2 - $2.50) / $2.50 = -$0.50 / $2.50 = -20%

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

As a costumer i would say c.hope it !

Well, i would start out by advertising a lot. take money out of unused profit to have build boards put up and internet advertising. also, make sure your store signs are large and noticeable. make sure you have good deals and prices that the average consumer would be okay with. also, location is key. being in a high technology based city/location would be excellent for your business because it is based off of technology. hope this ! : )