2. A new Hi-Fi set is now selling at $1,200 and the demand at this price is 800. For every $100 decrease in price, the demand will increase by 200. But when the price reaches $900, the demand is only 1300.

a) What are the sales revenues at $900, $1000, $1100 and $1200?

b) What is the price elasticity between $1200 and $1100, between $1100 and

$1000, and between $1000 and $900. Describe the change.

c) Examine the relationship between elasticity and sales revenue.