A monopolistic firm is considering to decrease the price of its product from $10 to $7. According to the available data, the quantity demanded will rise from 1200 units to 1800 units. (1) Using the midpoint method, compute the arc elasticity between two prices, $10 and $7. (2) Based on the elasticity you computed in (1), explain whether or not the firm should decrease the price from $10 to $7 in order to increase its revenue.
