An end-of-aisle price promotion changes the price elasticity of a good from −4 to −5. Suppose the normal price is $48, which equates marginal revenue with marginal cost at the initial elasticity of –4. What should the promotional price be when the elasticity changes to –5? (Hint: In other words, what price will equate marginal revenue and marginal cost?) a. $27.00 b. $45.00 c. $36.00 d. $31.50
An end-of-aisle price promotion changes the price elasticity of a good from −4 to −5. Suppose the normal price is $48, which equates marginal revenue with marginal cost at the initial elasticity of –4. What should the promotional price be when the elasticity changes to –5? (Hint: In other words, what price will equate marginal revenue and marginal cost?) a. $27.00 b. $45.00 c. $36.00 d. $31.50
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 10SQ: Along a segment of the demand curve where the price elasticity of demand is less than 1, a decrease...
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An end-of-aisle price promotion changes the price elasticity of a good from −4 to −5. Suppose the normal price is $48, which equates marginal revenue with marginal cost at the initial elasticity of –4.
What should the promotional price be when the elasticity changes to –5?
(Hint: In other words, what price will equate marginal revenue and marginal cost?)
a. $27.00
b. $45.00
c. $36.00
d. $31.50
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