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    5000 subscriptions to a channel if price is set at £10
    price elasticity -2
    price reduction to £9
    whats the effect on revenue?

    answer is increase by 4000
    i cant seem to get this answer?
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    (Original post by PrincessParadox)
    5000 subscriptions to a channel if price is set at £10
    price elasticity -2
    price reduction to £9
    whats the effect on revenue?

    answer is increase by 4000
    i cant seem to get this answer?
    is that price elasticity of demand?
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    PED = ∆D/∆P

    -2 = ∆D/-10
    ∆D = +20

    So demand is now 1.2*5000, which is 6000

    Revenue before: 5000*10 = 50 000
    Revenue after: 6000*9 = 54 000

    54000 - 50000 = 4000
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    ah yes thanks m1ikia
    i was doing 20% less demand
 
 
 
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