John owns a food stall in New York City which sells hamburgers. Unfortunately, his business is not doing well, and there is a high risk that the company will go bankrupt in the near future. In an attempt to increase the revenue of his company, John decides to experiment with changing the price of his hamburgers and he keeps a record of the results.

Table 1 shows the daily sales of hamburgers at each corresponding price.

Price of a hamburger ($)	Sales of hamburgers / day
6	100
7	80

Table 1 – Hamburger sales

Question 1

Based on the data in table 1, calculate the price elasticity of demand (PED) for hamburgers.

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Question 2

Based on the data in table 1, calculate the daily total revenue from hamburgers at each price.

Price of a hamburger ($)	Sales of hamburgers / day	Total revenue ($) / day
6	100
7	80

Table 1 – Hamburger sales

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Question 3

Assuming the PED remains constant, what would be the daily total revenue if John increased the price to $8 per hamburger?

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Question 4

Calculate the increase/decrease in daily total revenue from increasing the price to $8 per hamburger.

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Question 5

Table 2 is an incomplete list of the value of PED with the corresponding classification for each case. Using the example given in row A, complete the rest of the table.

	Value of PED	Classification
A	1 > PED > 0	Price Inelastic Demand
B		Price Elastic Demand
C		Unit Elastic Demand
D		Perfectly Inelastic Demand
E		Perfectly Elastic Demand