Hanna Corporation markets a compact microwave oven. In 2010 they sold 23,000 units at $375 each. Per capita disposable income in 2010 was $6,750. Hanna economists have determined that the arc price elasticity for this microwave oven is −1.2. Which the following statement is wrong? 1. A price decrease in 2011 will help company revenue growth 2. If all other things remain equal, sales volume for 2011 are 27,312 if price is reduced to 325. 3. Assume that arc income elasticity for microwave ovens is 2.5 and price and income effects are independent and additive. Given that the price is reduced to $325, and that per capita disposable income increases to $7,000, sales volume for 2011 will be 29,032. 4. A price increase in 2011 will help company revenue growth.
Hanna Corporation markets a compact microwave oven. In 2010 they sold 23,000 units at $375 each. Per capita disposable income in 2010 was $6,750. Hanna economists have determined that the arc
1. A price decrease in 2011 will help company revenue growth
2. If all other things remain equal, sales volume for 2011 are 27,312 if price is reduced to 325.
3. Assume that arc income elasticity for microwave ovens is 2.5 and price and income effects are independent and additive. Given that the price is reduced to $325, and that per capita disposable income increases to $7,000, sales volume for 2011 will be 29,032.
4. A price increase in 2011 will help company revenue growth.
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