Abdul Sdn. Bhd. sells 100,000 bicycles each year at RM250 per bicycle. From past experience the manager of Abdul Sdn Bhd believes the price elasticity of the company’s bicycles is approximately - 0.8. The manager is thinking of increasing the bicycle’s prices to RM300 per bicycle, an increase of 20%. Calculate the anticipated % change in the company’s sales volume. Calculate the new total revenue. Should the manager of Abdul Sdn Bhd change his pricing strategy? Justify your answe
Abdul Sdn. Bhd. sells 100,000 bicycles each year at RM250 per bicycle. From past experience the manager of Abdul Sdn Bhd believes the price elasticity of the company’s bicycles is approximately - 0.8. The manager is thinking of increasing the bicycle’s prices to RM300 per bicycle, an increase of 20%. Calculate the anticipated % change in the company’s sales volume. Calculate the new total revenue. Should the manager of Abdul Sdn Bhd change his pricing strategy? Justify your answe
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Abdul Sdn. Bhd. sells 100,000 bicycles each year at RM250 per bicycle. From past experience the manager of Abdul Sdn Bhd believes the price elasticity of the company’s bicycles is approximately - 0.8. The manager is thinking of increasing the bicycle’s prices to RM300 per bicycle, an increase of 20%.
- Calculate the anticipated % change in the company’s sales volume.
- Calculate the new total revenue.
- Should the manager of Abdul Sdn Bhd change his pricing strategy? Justify your answer
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