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 $25. As a result, Stopdecay's sales declined by 1,500 units per month. If Stopdecay knows that the arc price elasticity of demand for its toothbrush is −1.6, 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. $25.00 $30.75 $21.96 $28.46 It Stopdecay does not change its price, the average monthly total revenue would be . 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 . Should Stopdecay change the price of its electric toothbrush?
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 $25. As a result, Stopdecay's sales declined by 1,500 units per month. If Stopdecay knows that the arc price elasticity of demand for its toothbrush is −1.6, 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. $25.00 $30.75 $21.96 $28.46 It Stopdecay does not change its price, the average monthly total revenue would be . 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 . Should Stopdecay change the price of its electric toothbrush?
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 8E: The Stopdecay Company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per...
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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 $25. As a result, Stopdecay's sales declined by 1,500 units per month.
If Stopdecay knows that the arc price elasticity of demand for its toothbrush is −1.6, 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.
$25.00
$30.75
$21.96
$28.46
It Stopdecay does not change its price, the average monthly total revenue would be . 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 .
Should Stopdecay change the price of its electric toothbrush?
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