a. Elasticity of demand isE D=%_Q D/%P=–2.5%/10%=–0.25b. The total revenue isT R=PS ODA ×QSODAThe impact of the bottlers’ price change on total revenue can be estimated by using the fact thatthe percentage change in a product of two numbers is approximately equal to the sum of thepercentage changes in the product’s components. Therefore,%_T R≈ %_PS ODA + %_QSODA = 10–2.5 = 7.5Thus, in approximate percentage terms, the impact of the bottlers’ price changes on total revenuewas a 7.5% increase.
