Question

II Problems 1. Vacations-R-Us.com, the online cruise seller, wants to increase its total revenue. One strategy is to offer a 10% discount on every cruise it sells. Vacations-R-Us.com knows that its customers can be divided into two distinct groups according to their likely responses to the discount. The accompanying table shows how the two groups respond to the discount. Volume of sales before the 10% discount Volume of sales after the 10% discount Group A (sales per week) 1.55 million 1.65 million Group B (sales per week) 1.50 million 1.70 million a. Using the midpoint method, calculate the price elasticities of demand for group A and B. b. Explain how the discount will affect total revenue from each group.

          II Problems
1. Vacations-R-Us.com, the online cruise seller, wants to increase its total revenue.
One strategy is to offer a 10% discount on every cruise it sells. Vacations-R-Us.com
knows that its customers can be divided into two distinct groups according to their
likely responses to the discount.
The accompanying table shows how the two groups respond to the discount.
Volume of sales before the 10% discount
Volume of sales after the 10% discount
Group A
(sales per week)
1.55 million
1.65 million
Group B
(sales per week)
1.50 million
1.70 million
a. Using the midpoint method, calculate the price elasticities of demand for group A
and B.
b. Explain how the discount will affect total revenue from each group.

II Problems
1. Vacations-R-Us.com, the online cruise seller, wants to increase its total revenue.
One strategy is to offer a 10% discount on every cruise it sells. Vacations-R-Us.com
knows that its customers can be divided into two distinct groups according to their
likely responses to the discount.
The accompanying table shows how the two groups respond to the discount.
Volume of sales before the 10% discount
Volume of sales after the 10% discount
Group A
(sales per week)
1.55 million
1.65 million
Group B
(sales per week)
1.50 million
1.70 million
a. Using the midpoint method, calculate the price elasticities of demand for group A
and B.
b. Explain how the discount will affect total revenue from each group.

Added by Sarah G.

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