George has been selling 8,000 T-shirts per month for $8.00. When he increased the price to $9.00, he sold only 7,000 T-shirts. Which of the following best approximates the price elasticity of demand? a. -0.5667 b. -1.02 c. -1.1333 d. -1.2467 Suppose George's marginal cost is $3 per shirt. Before the price change, George's initial price markup over marginal cost was approximately _________ George's desired markup is ___________ . Since George's initial markup, or actual margin, was ___________ than his desired margin, raising the price was _________ .
George has been selling 8,000 T-shirts per month for $8.00. When he increased the price to $9.00, he sold only 7,000 T-shirts. Which of the following best approximates the price elasticity of demand? a. -0.5667 b. -1.02 c. -1.1333 d. -1.2467 Suppose George's marginal cost is $3 per shirt. Before the price change, George's initial price markup over marginal cost was approximately _________ George's desired markup is ___________ . Since George's initial markup, or actual margin, was ___________ than his desired margin, raising the price was _________ .
Chapter6: Elasticities
Section: Chapter Questions
Problem 1P
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Question
George has been selling 8,000 T-shirts per month for $8.00. When he increased the price to $9.00, he sold only 7,000 T-shirts.
Which of the following best approximates the price elasticity of demand ?
a. -0.5667
b. -1.02
c. -1.1333
d. -1.2467
Suppose George's marginal cost is $3 per shirt.
Before the price change, George's initial price markup over marginal cost was approximately _________ George's desired markup is ___________ .
Since George's initial markup, or actual margin, was ___________ than his desired margin, raising the price was _________ .
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