3.3. KINDOFBLUE JEANS. Two years ago, KindOfBlue jeans were priced at $72 and 121,000 units were sold. Last year, the price was lowered to $68 and sales increased to 132,000. (a) Estimate the value of the demand elasticity. (b) Based on your estimate of the demand elasticity, how many units would you expect to be sold if price were lowered by an additional $1? (c) In order to increase profits, should price be lowered below $68? If your answer begins - as it should! - with "it depends," indicate as clearly as possible what additional information you would need and how you would base your answer on such additional information.

3.3. KINDOFBLUE JEANS. Two years ago, KindOfBlue jeans were priced at $72 and 121,000 units were sold. Last year, the price was lowered to $68 and sales increased to 132,000. (a) Estimate the value of the demand elasticity. (b) Based on your estimate of the demand elasticity, how many units would you expect to be sold if price were lowered by an additional $1? (c) In order to increase profits, should price be lowered below $68? If your answer begins - as it should! - with "it depends," indicate as clearly as possible what additional information you would need and how you would base your answer on such additional information.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter10: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 17CQ

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