XYZ Family Inc. has developed a new product. The market demand for this product is given as follows:
Q = 240 – 4P (which means the inverse demand is given by: P = 60 – 0.25Q).
a. If the product is priced at $50, what is the point price elasticity of demand? Is demand elastic or inelastic (pick one)? (show work)
b. If they give a slight discount from the price of $50, what will happen to the total revenue of XYZ Family Inc. from this product? ( show work)