An end-of-aisle price promotion changes the price elasticity of a good from −3 to −4. Suppose the normal price is $18, which equates marginal revenue with marginal cost at the initial elasticity of –3. What should the promotional price be when the elasticity changes to –4? (Hint: In other words, what price will equate marginal revenue and marginal cost?)
An end-of-aisle price promotion changes the price elasticity of a good from −3 to −4. Suppose the normal price is $18, which equates marginal revenue with marginal cost at the initial elasticity of –3. What should the promotional price be when the elasticity changes to –4? (Hint: In other words, what price will equate marginal revenue and marginal cost?)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter7: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 13CQ: Suppose Erin, the owner-manager of a local hotel projects the following demand for her rooms: a....
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An end-of-aisle price promotion changes the price elasticity of a good from −3 to −4. Suppose the normal price is $18, which equates marginal revenue with marginal cost at the initial elasticity of –3.
What should the promotional price be when the elasticity changes to –4? (Hint: In other words, what price will equate marginal revenue and marginal cost?)
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