a)The firm is currently selling at the price of $90. After the price cut of 20% the new price would be $72. However, the percentage change in the price would be -0.25%. 2022 latest answers
b)The firm sells 100000 units before the price cut; now tripling the amount the new quantity sold would be 300000 units. The elasticity of demand would be 27.77%.
c)They do not earn the same profits as before. After a cut into the prices the total revenue of the firm would decrease. So, for that to increase the revenues the firm has to increase the total output to reduce the cost of production. But doing so the firm might faces losses in the long run. Therefore, the firm has to produce where the marginal costs equal to the prices.