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Analyzing the relation between elasticity of demand and total revenue.

A local owner of a privately held video rental store read in a newspaper that the elasticity of market demand for video rentals is -.45. She thus reasoned that if she increased the price of her rentals, her total revenue would increase. So she increased her price by 20%, and her revenues fell sharply. What is your explanation for this outcome?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M917841

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