Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 6, Problem 6.3IP
To determine
The promotional
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6-3 Promotional Pricing An end-of-aisle price promotion changes the price elasticity of a good from 22 to 23. If the normal price is $10, what should the promotional price be?
An end of aisle price promotion changes the price elasticity of a good from -2 to -3. If the normal price is $10 what should the promotional price be
Which of the following is most likely to have a low price elasticity of demand?
A good that is very expensive.
A good with no close substitutes.
A good that most people consider a luxury.
All are equally likely to have a low price elasticity of demand.
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Managerial Economics: A Problem Solving Approach
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- Along a segment of the demand curve where the price elasticity of demand is less than 1, a decrease in price a. is impossible. b. will increase total revenue. c. will decrease total revenue. d. decreases quantity demanded.arrow_forwardProve that price elasticity of demand is not the same as the slope of a demand curve.arrow_forwardIf bus travel is an inferior good, its income elasticity of demand is a. strictly greater than 1. b. positive. c. equal to zero. d. negative.arrow_forward
- The price elasticity of supply of baking flour is 0.8 when there is an increase of price from RM16 to RM18 per kilogram. How many percent change of suppliers that supply baking flour in the market with the new price?arrow_forwardWhich of the following would NOT change demand? * a)information about the product's health effects b)the price of related products c)the income of the consumers d)the price of the productarrow_forwardcross-price elasticities ?arrow_forward
- Suppose that you are currently charging $10 for your product and selling 10,000 items. Calculate your total revenue. If you increase your price to $11, you estimate that you will sell 8,000 units. Calculate your total revenue. Calculate the price elasticity of demand.arrow_forwardPrice elasticity of supply of a good is 9 .A producer sells 900 units of this good at 8 per unit. How much will he be willing to sell at the price of 10 per unit?arrow_forwardIn bazaars around the world, haggling over price is a way of life. Do you think a seller’s reservation price (the lowest price that will be accepted) is influenced by demand elasticities?arrow_forward
- If the own-price elasticity of demand is -5 and there is a 2% increase in the price, by what percentage will the quantity demanded change the percentage change in demand will be 10% the percentage change in the quantity demanded will decrease by 10% the percentage change in the quantity demanded will increase by 10% none of the abovearrow_forwardWhich of the following conditions would result in a higher price elasticity of demand? a longer period of time all of these the good makes up a large portion of one's budget more substitutesarrow_forwardAn end-of-aisle price promotion changes the price elasticity of a good from -2 to -3 . Suppose the normal price is$26, revenue with marginal cost at the initial elasticity of -2 . What should the promotional price be when the elasticity changes to -3 ? (Hint: In other words, what price will equatemcost?)$11.70 $15,60 $13.6 $19.50arrow_forward
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