Answer
Price elasticity of demand is -0.167, and since the coefficient is less than 1, price is inelastic.
If price was changed from 1 dollar to 50 cents with the same price elasticity, the total revenue would decrease.
Work Step by Step
Formula of price elasticity of demand is:
percentage change in quantity demanded/percentage change in price
=$\frac{1.50-1}{1.5}$ ÷ $\frac{100-300}{100}$
= -0.167
Since the value of price elasticity of demand has a coefficient that is less than one, quantity demanded would change less than proportionately in response to a change in price, and thus price elasticity of demand is inelastic.
When price decreases from 1 dollar to 50 cents, quantity demanded would increase less than proportionately, and thus gain in area of (P x Q) would be less than the loss of area, and total revenue would decrease.
