i. A dentist was charging Rs. 300 for a standard cleaning job and it used to generate total revenue equal to Rs. 30,000 per month. She has, since last month, increased the price of dental cleaning to Rs. 350. As a result, fewer customers are now coming for dental cleaning, but the total revenue is now Rs. 33,250. For this, what can we conclude about the elasticity of demand for her dental service?
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Answer:
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Explanation:
Ed=(−)0.3 ( Demand is less elastic as Ed<1)
Negaative sign of Ed indicates relationship between price and quantity demanded.
Total Expenditure Method
With increase in fees, the total revenue of dentist has also increased. Hence, the elasticity of demand for her dental service is less than one.
Proportionate Method
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