The table 4.5 shows the increase in total revenue for soft drinks at Henry’s store, when he introduced the special price. This “special price” was offered as a part of the store’s Fourth of July Celebration sale.
1. Does the data indicate an elastic or inelastic demand for soft drinks at Henry’s store?
2. What do you think are the main causes of a reduction in revenue from soft drinks for Henry after the permanent reduction in the price of soft drinks?
3. How do you suggest he reassess his competitive tactic? Specifically, what factors other than price should be considered when evaluating total revenue?
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