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Ghose and Han​ (2014) found that the elasticity of demand for Google Play apps is negative 3.7. This elasticity applies to a small college town where approximately​ 1,000 apps per month are sold. If price rises by 1​%, what would be the effect on quantity​ demanded? The quantity demanded will decrease increase decrease by 3.7 percent. ​(Enter your response rounded to one decimal​ place.) Would revenue rise or​ fall? Revenue would fall fall remain unchanged rise . What is the percentage change in​ revenue? The change in revenue is negative 3.7 percent. ​(Enter your response rounded to two decimal​ places.)

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TomShelby

Answer:

quantity demand 3.7%

revenues decrease by 2.74%

Explanation:

As the price-elasticity is negative this means as price increase, the sales will decrease:

If price rise by 1% then sales will drop by 3.7%

revenue will change as follows:

sales quantity x price

(1 - 0.037) x 1.01 = 0,97263‬ revenues

1 - 0.97263 = 0,02737‬

revenues  will decrease by 2.74%

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