23.The base price for a product is $100 and the variable cost is $60. The quantity that was sold is 1 million units. The company decided to cut the price by 10%. What is the elasticity needed to breakeven?

23.The base price for a product is $100 and the variable cost is $60. The quantity that was sold is 1 million units. The company decided to cut the price by 10%. What is the elasticity needed to breakeven?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 3E

See similar textbooks

Related questions

Q: Long run elasticity of supply is known as

A: Answer: Note: the question seems to be asking about whether the long-run supply is elastic or…

Q: A local coffee house is considering increasing the price on a cup of coffee from $1.59 to $1.89 per…

A: Given information, Initial price: $1.59 Final price: $1.89 Initial quantity demanded: 350 Final…

Q: The producer of product Z has gathered some information regarding product Z: • in 2020 the price was…

A: Given Price of good Z in 2020 (P20) =4.95 Quantity sold in 2020 (Q20) =58,000 units Price of good…

Q: George has been selling 5,000 T-shirts per month for $8.50. When he increased the price to $9.50, he…

A: It is given that, Q1 = 5000, P1 = $8.50, Q2 = 4000, and P2 = $9.50. Therefore, the elasticity of…

Q: Joe's Pig Palace sells barbecue plates for $4.50 each, and serves an average of 525 customers per…

A: Price elasticity of demand refers to the responsiveness of the quantity demanded to a change in…

Q: 5. Stagecoachsells 86000Guildford day ticketsevery month at a price of £8. The price elasticity of…

A: Given; Demand for tickets per month= 86000 Price of ticket= £8 Price elasticity of demand= -0.7 New…

Q: Price elasticity of supply in the short run and long term

A: Price elasticity of supply is the responsiveness change in the quantity supplied of a product when…

Q: Disney just raised its 3 day 3 park pass from $110.00 to $121.00. Sales fell from 4,000 per week to…

A: (Q) Disney just raised its 3 day 3 park pass from $110.00 to $121.00. Sales fell from 4,000 per week…

Q: The coefficient of price-elasticity of supply for a product is 2.5 if

A: Definition: economics alludes to the coefficient of elasticity as the price elasticity of demand, a…

Q: 28- Which of the following factors does NOT influence the price elasticity of demand of a prod the…

A: Price elasticity of the demand is considered as that economic activity or measure with basically…

Q: Questions 5-8, graph and explain how each can contribute to high gasoline/oil prices. 5 Price…

A: 5) There is inelastic price elasticity of demand. When oil price rises demand falls only by a small…

Q: 10 20 30 have been hired as an economic consultant by TELECOM and given the following demand…

A: Elasticity of demand measures the responsiveness of demand to change in the price level of…

Q: Last week you sold 800 units of a good at a price of $90 each. This week you would like to sell 950…

A: Price elasticity of demand = percentage change in quantity demanded/ percentage change in price

Q: perfectly elastic

A: Explanation: Perfect competition could be a market-style wherever there's a large range of patrons…

Q: A firm revenue rises from $400 to $500 when the price of its product rises from $20 per unit to $25…

A: we are given that initial total revenue =$400 final total revenue =$500 initial price =$20 final…

Q: A multi-plex theatre area is experiencing a decline in the number of ticketssold, falling revenues,…

A: The law of demand and supply is considered to be a keystone of modern economics.

Q: A company's research team finds that the elasticity of demand for a particular item at price p is…

Q: 2.The shoe company in Marikina have decided to increase to 18% per pair of shoes to due to its high…

A: Elasticity helps in determining the change in quantity demanded when there are changes in product…

Q: When a certain brand of dog food sells for $20 per bag, 10,000 units are sold; when the price…

A: Price elasticity of demand measures the responsiveness of quantity demanded with respect to change…

Q: Calculate the arc price elasticity as the price decrease from 40 to 30$ and interpret the result.…

A: Arc elasticity of demand can be calculated by following formula. Ed = % change in Qd/ % change in…

Q: The price of Kenwood blender increased from ȼ150 to ȼ250. Following the increase in price, quantity…

A: Given, Initial price (P2)= ȼ150 New price (P1)= ȼ250 Initial quantity demanded (Qd1)= 500 New…

Q: Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is…

A: Given; Initial price; P1=$2.25 Initial Quantity; Q1=250New Price; P2=$1.75New Quantity=300

Q: 5. Stagecoachsells 86000Guildford day ticketsevery month at a price of £8. The price elasticity of…

A: Price elasticity of demand : Ed= percenatge change in quantity demanded percentage change in price…

Q: Discuss "elasticity". Explain the importance of elasticity in revenue management.

A: The method that depicts the application of disciplined analytics predicting the behaviour of…

Q: Disney just raised its 3 day 3 park pass from $110.00 to $121.00. Sales fell from 4,000 per week to…

A: 1. Price elasticity of demand can be calculated as follows: Thus, the price elasticity of demand is…

Q: If the supply curve touches Y axis elasticity of the supply is less than one Tell the above is true…

A: Price elasticity refers to the level of change caused by the price of a good or service in its…

Q: relationship between elasticity and total revenue

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: A topic on optimal pricing, elasticity, stay-even analysis, or cost-based pricing.

A: There are many measures that the sellers can to maximize their profit. one of the measures is…

Q: An increase in the price of pure chocolate morsels from $3.25 to $3.45 causes Nestle to increase…

A: The price elasticity of supply measures the percentage change in the quantity supplied of a good or…

Q: D2

A: A good price elasticity of demand is a measure of how sensitive the quantity demanded for a product…

Q: 8.2. The demand for Firm A is said to be elastic. Do you agree with this statement? Justify your…

A: Price elasticity of demand is the change in the quantity demanded of a good in response to the…

Q: Danny "Dimes" Donahue is a neighborhood's 9-year-old entrepreneur. His most recent venture is…

A: At price $2.5, sale = 100 brownies. At price $ 2, sale = 300 brownies. We have to calculate price…

Q: George has been selling 5,500 T-shirts per month for $9.50. When he increased the price to $10.50,…

A: Elasticity of demand measures the responsiveness of quantity demanded to changes in price.A firm…

Q: The price elasticity of demand faced by an individual wheat farmer would come closest to which…

A: Demand elasticity refers to the proportional change in quantity demanded due to a proportional…

Q: short-run or long-run industry supply that is perfectly elastic?

A: The ‘short run supply curve’ of a firm is the part of its ‘marginal cost(MC) curve’ that lies above…

Q: A product's point price elasticity has been estimated at – 1.5. At the initial price of $20, the…

Q: A firm finds that its price elasticity of demand is 4.0. Currently, the firm is selling 2000 units…

A: An elastic demand is one in which the adjustment of quantity demanded because of an adjustment of…

Q: Price Elasticity of Demand Problem Business has price elasticity of -1.5 They sold 300 units at…

A: Price elasticity of demand =-1.5 Initially, at the price of $10, they sold 300 units P1 =$10, Q1=300…

Q: = 2000 30P. The commodity is initially The demand function for a commodity is given by Q priced at…

A: Given: Q=2000-30P Price=20 per unit To find: Price elasticity of demand Note: Due to multiple…

Q: Question 14 Mike's Mechanic Shop increased its total monthly revenue from $6,500 to $7,200 when it…

A: 14. Given, TR1= $6500 TR2= $7200 P1= $65 P2= $50

Q: Examine the impact on total revenue of an elastic demand curve and inelastic demand curve. Use…

A: Elastic Demand curve : The demand curve is said to be elastic when the quantity demanded varies up…

Q: When you compare the absolute value of the price elasticity of demand for most products [Hint, oil…

A: The quantity demanded of a good is defined as the amount of the good the consumers are willing and…

Q: POINTS PRICE QUANTITY TOTAL REVENUE PRICE ELASTICITY DEMANDED OF DEMAND A 50 150 7,500 В 45 200…

A: The degree to which demand responds to a change in another economic component like price, income…

Q: Explain the term price elasticity of demand? How is it measured? What factors influence market…

A: The mark-up rule signifies the pricing strategy adopted by a price making firm. It states that the…

Question

23.The base price for a product is $100 and the
variable cost is $60. The quantity that was
sold is 1 million units. The company decided to cut
the price by 10%. What is the elasticity
needed to breakeven?
A) 3.33
B) -3.33
C) -0.33
D) 1
E) 0.5

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The Potomac Range Corporation manufactures a line of microwave ovens costing $500 each. Its sales have averaged about 6,000 units per month during the past year. In August, Potomacs closest competitor, Spring City Stove Works, cut its price for a closely competitive model from $600 to $450. Potomac noticed that its sales volume declined to 4,500 units per month after Spring City announced its price cut. What is the arc cross elasticity of demand between Potomacs oven and the competitive Spring City model? Would you say that these two firms are very dose competitors? What other factors could have influenced the observed relationship? If Potomac knows that the arc price elasticity of demand for its ovens is 3.0, what price would Potomac have to charge to sell the same number of units it did before the Spring City price cut?
The firm’s vice president in charge of marketing believes that every 8% decrease in the selling price of one of the company's products would lead to a 26% increase in the product's total unit sales. The product's absorption costing unit product cost is ₱18.20. The variable production cost is ₱1.90 per unit and the variable selling and administrative cost is ₱2.30 per unit. The product's price elasticity of demand is closest to: a. -2.82 b. -4.41 c. -2.00 d. -1.79 The product's profit-maximizing price is closest to: a. ₱33.77 b. ₱3.60 c. ₱2.97 d. ₱6.57
Gerald makes a new brand of shoes that has a unit cost of $75.95 per shoe and a price elasticity of 4.70. What is the contribution - maximizing price for Gerald's shoes? Selected Answer: 62.66 Correct Answer: 96.48 \pm 0.2 i did the formula you recommended, but doesnt eqal the 96.48 as indicated ascorrect asnwer
Price of a cigarette pack is 6 and quantity sold is 1000 in March .Price was raised by 25% in April and and price elasticity was 0.8 What is the strategy that can be abopt by the firm to maintain sales
Suppose you own a tax preparation services company, with fixed costs of $3,000/month and marginal costs of $25/appt.If the price is $60/appt, 500 appointments would be sold. If the price is $50/appt, 760appointments would be sold. a.)Use these figures to calculate the price elasticity of demand for your services. b.)Calculate the monthly profits and profit margins (profit/revenue) associated with the price of $60/appt and $50/appt. c.)Given these calculations, what price should you charge for your services, $50/apptor $60/appt? Explain
A multi-plex theatre area is experiencing a decline in the number of ticketssold, falling revenues, and inadequate profits. The average price of a ticketis $20 and there are 1000 tickets sold daily on average. The estimated priceelasticity of demand is 1.5 and the theatre currently operating at an averageof 75 percent of capacity. There are three proposals in front of themanagement to consider:Proposal A: Proposal B: an aggressive advertising campaign (which is expected to reduce the elasticity of demand to 1), and a 10 percent increase in the average price of a ticket.
A company produces a special new type of TV. The company has fixed costs of $451,000, and it costs $1000 to produce each TV. The company projects that if it charges a price of $2600 for the TV, it will be able to sell 800 TVs. If the company wants to sell 850 TVs, however, it must lower the price to $2300. Assume a linear demand. If the company sets the price at $3800, how much profit can it earn? It can expect to earn/lose $enter your response here. (Round answer to nearest dollar.)
The price of Kenwood blender increased from ȼ150 to ȼ250. Following the increase in price, quantity demanded of the blender dropped from 500 to 400. Compute the point and arc elasticity of demand
Qd= 25000-2p Qs= 10000-1p Calculate the market equlibrium level of price and quantity for housing unit? Calculate price elasticity of demand using point elasticity method when industry is in equlibrium?
If Carmen's Coffee Company wants to increase total revenue and the price elasticity of demand is 0.43, the company should A) increase the price of its coffee. B) decrease the price of its coffee. c)keep the price constant since a price increase or decrease will cause total revenue to fall. d)advertise since this is the only option that will increase total revenue. urgent i will 5 upvotes.
A company produces a special new type of TV. The company has fixed costs of $494,000, and it costs $1100 to produce each TV. The company projects that if it charges a price of $2500 for the TV, it will be able to sell 700 TVs. If the company wants to sell 750 TVs, however, it must lower the price to $2200. Assume a linear demand. What price should be set to earn maximum profits?
ELASTICITY -What type of elasticity occurs and what is the financial result if: • The elasticity is 0.5 • Sales Price Change is 5.0% • Original Sales Price is $10.00 • Original Sales Qty 100,000. Inelastic -- Loss of $55,000 Inelastic -- Profit of $55,000 Elastic -- Profit of $55,000 Elastic -- Loss of $55,000