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The Corvette When the C8 Corvette first arrived back in June of 2019, the world was shocked to see the mid-engine sports car carry an MSRP under $60,000. And while Chevrolet was more than happy to get that price into the headlines, it didn't stay set in place for very long. We've already seen the automaker adjust C8 pricing in the past, but now thanks to the folks at CorvetteBlogger, we have yet another significant Corvette price increase to report. According to the report the base price of overy 2023 C8 Corvette Stingray has

The Corvette When the C8 Corvette first arrived back in June of 2019, the world was shocked to see the mid-engine sports car carry an MSRP under $60,000. And while Chevrolet was more than happy to get that price into the headlines, it didn't stay set in place for very long. We've already seen the automaker adjust C8 pricing in the past, but now thanks to the folks at CorvetteBlogger, we have yet another significant Corvette price increase to report. According to the report the base price of overy 2023 C8 Corvette Stingray has

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Calculating Price Elasticity

The Corvette When the C8 Corvette first arrived back in June of 2019, the world was shocked to see the mid-engine sports car carry an MSRP under $60,000. And while Chevrolet was more than happy to get that price into the headlines, it didn't stay set in place for very long. We've already seen the automaker adjust C8 pricing in the past, but now thanks to the folks at CorvetteBlogger, we have yet another significant Corvette price increase to report. According to the report, the base price of every 2023 C8 Corvette Stingray has increased by $2300 as of June 13, regardless of which trim level your build may be. That means a base 1LT coupe increased from $63,295 to $65,595 including destination charges. An entry-level droptop starts at a relatively pricey increased from $70,795 to $73,095 after the adjustments. GM hasn't been too specific about the reason behind this price increase, but the current economic situation seems a likely culprit. Chevrolet had the following to say when pressed about the price increase: "The MSRP of the 2023 Corvette Stingray coupe and convertible has increased effective June 13," Senior Communications Manager Trevor Thompkins told Road & Track via email. "Customers with sold orders submitted prior to when the price increase became effective will not be impacted by the change. We monitor and adjust pricing on all our products regularly, and we're confident the Corvette remains a winning formula of performance and attainability." Chevrolet, in another statement, made it clear that the price increases did not have a big impact on their sales. "We aren't seeing customers shying away from our cars. Orders are down a little, maybe 3% on the 1LTs but only 1% on the convertibles. Customers know quality when they see it!" a. Calculate the price elasticity of demand (before the price increase) for the 1LT and the convertible model. b. Identify the elasticity and weather the Corvettes are elastic, inelastic, or elastic. c. If you were an economist for Chevrolet (the maker of the car), what would your policy recommendation be? Explain your policy and WHY you believe this is the appropriate policy.
Transcribed Image Text:The Corvette When the C8 Corvette first arrived back in June of 2019, the world was shocked to see the mid-engine sports car carry an MSRP under $60,000. And while Chevrolet was more than happy to get that price into the headlines, it didn't stay set in place for very long. We've already seen the automaker adjust C8 pricing in the past, but now thanks to the folks at CorvetteBlogger, we have yet another significant Corvette price increase to report. According to the report, the base price of every 2023 C8 Corvette Stingray has increased by $2300 as of June 13, regardless of which trim level your build may be. That means a base 1LT coupe increased from $63,295 to $65,595 including destination charges. An entry-level droptop starts at a relatively pricey increased from $70,795 to $73,095 after the adjustments. GM hasn't been too specific about the reason behind this price increase, but the current economic situation seems a likely culprit. Chevrolet had the following to say when pressed about the price increase: "The MSRP of the 2023 Corvette Stingray coupe and convertible has increased effective June 13," Senior Communications Manager Trevor Thompkins told Road & Track via email. "Customers with sold orders submitted prior to when the price increase became effective will not be impacted by the change. We monitor and adjust pricing on all our products regularly, and we're confident the Corvette remains a winning formula of performance and attainability." Chevrolet, in another statement, made it clear that the price increases did not have a big impact on their sales. "We aren't seeing customers shying away from our cars. Orders are down a little, maybe 3% on the 1LTs but only 1% on the convertibles. Customers know quality when they see it!" a. Calculate the price elasticity of demand (before the price increase) for the 1LT and the convertible model. b. Identify the elasticity and weather the Corvettes are elastic, inelastic, or elastic. c. If you were an economist for Chevrolet (the maker of the car), what would your policy recommendation be? Explain your policy and WHY you believe this is the appropriate policy.
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