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Electronics Warehouse The Electronics Warehouse, Inc. is a leading wholesaler of AM/FM digital clock radios. The electronics wholesale business is highly competitive, so the demand for digital clock radios is very price-sensitive. In fact, the marketing department has estimated the own-price elasticity faced by The Electronics Warehouse for its digital clock radios is about -3. The Electronics Warehouse sells 3,000 units monthly at a price of $25 per unit to retailers. Its closest competitor sells a similar radio that it sells for $28 per unit. a. How many units will the Electronics Warehouse sell if it decides to drop its price to $22 per unit? b. The marketing department has also estimated that the cross-price elasticity of demand between the two radios is 0.3. What will sales be for the Electronics Warehouse if the competitor decides to cut the price of its radios to $24 if the Electronics Warehouse maintains its price at $25?

Electronics Warehouse The Electronics Warehouse, Inc. is a leading wholesaler of AM/FM digital clock radios. The electronics wholesale business is highly competitive, so the demand for digital clock radios is very price-sensitive. In fact, the marketing department has estimated the own-price elasticity faced by The Electronics Warehouse for its digital clock radios is about -3. The Electronics Warehouse sells 3,000 units monthly at a price of $25 per unit to retailers. Its closest competitor sells a similar radio that it sells for $28 per unit. a. How many units will the Electronics Warehouse sell if it decides to drop its price to $22 per unit? b. The marketing department has also estimated that the cross-price elasticity of demand between the two radios is 0.3. What will sales be for the Electronics Warehouse if the competitor decides to cut the price of its radios to $24 if the Electronics Warehouse maintains its price at $25?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter3: Demand Analysis
Section: Chapter Questions
Problem 1E: The Potomac Range Corporation manufactures a line of microwave ovens costing $500 each. Its sales...
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Electronics Warehouse The Electronics Warehouse, Inc. is a leading wholesaler of AM/FM digital clock radios. The electronics wholesale business is highly competitive, so the demand for digital clock radios is very price-sensitive. In fact, the marketing department has estimated the own-price elasticity faced by The Electronics Warehouse for its digital clock radios is about -3. The Electronics Warehouse sells 3,000 units monthly at a price of $25 per unit to retailers. Its closest competitor sells a similar radio that it sells for $28 per unit. a. How many units will the Electronics Warehouse sell if it decides to drop its price to $22 per unit? b. The marketing department has also estimated that the cross-price elasticity of demand between the two radios is 0.3. What will sales be for the Electronics Warehouse if the competitor decides to cut the price of its radios to $24 if the Electronics Warehouse maintains its price at $25? 1
Transcribed Image Text:Electronics Warehouse The Electronics Warehouse, Inc. is a leading wholesaler of AM/FM digital clock radios. The electronics wholesale business is highly competitive, so the demand for digital clock radios is very price-sensitive. In fact, the marketing department has estimated the own-price elasticity faced by The Electronics Warehouse for its digital clock radios is about -3. The Electronics Warehouse sells 3,000 units monthly at a price of $25 per unit to retailers. Its closest competitor sells a similar radio that it sells for $28 per unit. a. How many units will the Electronics Warehouse sell if it decides to drop its price to $22 per unit? b. The marketing department has also estimated that the cross-price elasticity of demand between the two radios is 0.3. What will sales be for the Electronics Warehouse if the competitor decides to cut the price of its radios to $24 if the Electronics Warehouse maintains its price at $25? 1
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