Final answer:
Increasing the price of ice cream cones with an elasticity of -1.5 will lead to a decline in quantity demanded and decrease total revenue. For the hair growth drug, with demand elasticity at 1.4, lowering the price is recommended to increase revenue, while an elasticity of 0.6 suggests raising the price. An elasticity of 1 signifies that the current price maximizes revenue.
Step-by-step explanation:
Understanding Price Elasticity and Revenue
For the local ice cream parlor with a price elasticity of demand at -1.5, increasing the price from $4.00 to $4.10 per cone would mean a decrease in the quantity demanded. Since the demand is elastic, the percentage decrease in quantity demanded will be greater than the percentage increase in price, thus leading to a reduction in total revenue. With the given elasticity and the absence of specific formula application in the initial question, we can't calculate the exact new quantity sold. However, it is expected that fewer than 500 cones will be sold.
Regarding the pharmaceutical company, if the elasticity of demand for the new hair growth drug is 1.4, a price decrease is advised to maximize revenue, due to the proportionally larger increase in quantity sold. If elasticity is 0.6, a price increase is advised, as the lost quantity will be less significant compared to the revenue gained from the higher price. If elasticity is equal to 1, it suggests revenue is maximized at the current price, and no price adjustment is needed.