The demand curve for haircuts at Terry Bernard's Hair Design is P= 20-0.20Q where Q is the number of haircuts per week and P is the price of a haircut. Terry is considering raising her price above the current price of $15. terry is unwilling to raise the price if the price hike will cause revenues to fall.
a. Should Terry raise the price of haircuts above $15? Why or why not?
b. Assume demand for Terry's haircuts increase to P=40 - 0.40Q. At a price of $15, should Terry raise the price of her haircuts? Why or why not?