Suppose we estimate that the demand elasticity for fine leather ...

[Kikoku]

Suppose we estimate that the demand elasticity for fine leather jackets is -.7 at their current prices. Then we know that:
 a. a 1 increase in price reduces quantity sold by .7.
  b. no one wants to buy leather jackets.
  c. demand for leather jackets is elastic.
  d. a cut in the prices will increase total revenue.
  e. leather jackets are luxury items.

Question 2

Browsing on the Job The Dunder-Miflin Paper Company has been suffering an even greater spate of shirking by the accounting staff ever since its employees got access to the Internet on their desktop computers. Why did this not affect the sales staff as much?

[elyse44]

Answer to Question 1

a

Answer to Question 2

The accountants are very likely salaried employees whose compensation does not depend on how much effort they exert. In contrast, the sales staff is likely paid on commission which makes goofing off on the Internet will come at the expense of more sales and will therefore reduce their income.

[Kikoku]

Thanks for the timely response, appreciate it

[bulacsom]

Gracias!