The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decayfighter, reduced the price of its electric toothbrush from $35 to $20. As a result, Stopdecay's sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecay's toothbrush and Decayfighter's toothbrush? o -0.38 O 2.63 0.38 o -2.63 The value of the arc cross elasticity between these products suggests that they are substitutes If Stopdecay knows that the arc price elasticity of demand for its toothbrush is -1.4, what price would Stopdecay have to charge to sell the same number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30. O $20.00 O $21.56 $30.18 O $28.99 It Stopdecay does not change its price, the average monthly total revenue would be $200,000 ▼ . On the other hand, if it changes the price to sell the same number of units as it did before, the average monthly total revenue would be $160,000 Should Stopdecay change the price of its electric toothbrush? Yes; as calculated, changing the price increases the total revenue. O It is unclear based on the information given. O No; as calculated, changing the price lowers the total revenue.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. If Stopdecay does not change its price, the average monthly total revenue would be (Dropdown options: 240k, 195k, 200k, 162,500)

5. On the other hand, if it changes the price to sell the same number of units as it did before, the average monthly total revenue would be (Dropdown options: 231,920 or 241,440, or 160,000 or 172,480)

8. Exercise 3.8
The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest
competitor, Decayfighter, reduced the price of its electric toothbrush from $35 to $20. As a result, Stopdecay's sales declined by 1,500 units per
month.
What is the arc cross elasticity of demand between Stopdecay's toothbrush and Decayfighter's toothbrush?
o -0.38
2.63
O 0.38
o -2.63
The value of the arc cross elasticity between these products suggests that they are
substitutes
If Stopdecay knows that the arc price elasticity of demand for its toothbrush is –1.4, what price would Stopdecay have to charge to sell the same
number of units as it did before the Decayfighter price cut? Assume that Decayfighter holds the price of its toothbrush constant at $30.
O $20.00
O $21.56
O $30.18
O $28.99
It Stopdecay does not change its price, the average monthly total revenue would be $200,000 ▼
. On the other hand, if it changes the price to sell
the same number of units as it did before, the average monthly total revenue would be $160,000
Should Stopdecay change the price of its electric toothbrush?
Yes; as calculated, changing the price increases the total revenue.
O It is unclear based on the information given.
No; as calculated, changing the price lowers the total revenue.

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