Question: Barker Cement Company is considering lowering the price on an 80 lb. bag of cement from $3 to $2. Presently, Barker sells 10,000 bags of cement per week, and its market analysts believe the price elasticity of demand to be -2 over this price range.

(a) If Barker Cement Company lowers the price, will its total revenue increase, decrease, or remain unchanged? Why?

(b) What will be the new level of quantity demanded? Of total revenue?