The price elasticity of demand for a textbook sold in the United States is estimated to be -2.0, whereas the price elasticity of demand for books sold overseas is -2.5. The U.S. market requireshardcover books with a marginal cost of $30; the overseas market is normally served withsoftcover texts on newsprint, having a marginal cost of only $10. Calculate the profit - maximizing price in each market.

The price elasticity of demand for a textbook sold in the United States is estimated to be -2.0, whereas the price elasticity of demand for books sold overseas is -2.5. The U.S. market requireshardcover books with a marginal cost of $30; the overseas market is normally served withsoftcover texts on newsprint, having a marginal cost of only $10. Calculate the profit - maximizing price in each market.

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...

See similar textbooks

Similar questions

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, Decayfigh ter, reduced the price of its electric toothbrush from $35 to $30. As a result, Stopde cays sales declined by 1,500 units per month. What is the arc cross elasticity of demand between Stopdecays toothbrush and Decayfighters toothbrush? What does this indicate about the relationship between the two products? If Stopdecay knows that the arc price elasticity of demand for its toothbrush is 1.5, 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. What is Stopdecays average monthly total revenue from the sale of electric toothbrushes before and after the price change determined in part (b)? Is the result in part (c) necessarily desirable? What other factors would have to be taken into consideration?
suppose a pharmaceutical company considers increasing the price of insulin tm $125 per vial to $300 per vial. whenthe price was $125, the company sold 100, 000 vials per day. the company knows its price elasticity is .25. calculate thepercentage change in quantity demanded that would result in a price elasticity of .25. show your work
Genovia has experienced exceptional growth in recent years. Its GDP per capita (orIncome) has increased from around $30,000 to $50,000 in last 5 years. Over theperiod quantity demanded of personal cars has increased from 450,000 units per yearto 600,000 units. Quantity demanded of public transport, however, has declined from10,000 buses to 7,000 buses. Calculate income elasticity of demand and tell whichproduct is a normal good and which one is inferior.
Joe's Pig Palace sells barbecue plates for $4.50 each, and serves an average of 525 customers per week. During a recent promotion, Joe cut his price to $3.50 and observed an increase in sales to 600 plates per week. a. Calculate Joe's arc price elasticity of demand. b. Joe is considering permanently lowering his price to $4.00 to increase revenue. How many plates should Joe expect to sell at the new price? Does the move make sense in the light of Joe's desire to increase revenue?
Suppose a movie theater determines it can charge different prices to patrons who go to weekday matinees and people who attend evening and weekend shows. The movie theater's goal is to increase total revenue. See Hint The price elasticity of demand for weekend and evening patrons is -0.50, and the price elasticity of demand for matinee moviegoers is -2.80. Based on the price elasticity of demand for each group of people, how should the movie theater adjust its prices? Choose one: O A. Raise the price for matinee moviegoers, and keep the price the same for weekend and evening patrons. O B. Lower the price for matinee moviegoers, and raise the price for weekend and evening patrons. O C. Lower the price for matinee moviegoers, and keep the price the same for weekend and evening patrons. O D. Raise the price for matinee moviegoers, and lower the price for weekend and evening patrons.
you sell twi different goods : printer and toner catridges. the price elasticity of demand for the printer is -3.4, and you earn a revenue of Rm15000 per month from the good. you earn a revenue of Rm5000 per month from the toner catridges. the cross price elasticity of demand for both of the goods is -2.5. if you decide to decrease the price of the printer by 5%, calculate your new total revenue for both of the goods.
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?
George has been selling 7,000 T-shirts per month for $7.00. When he increased the price to $9.00, he sold only 6,000 T-shirts. Which of the following best approximates the price elasticity of demand? -0.6769 -0.6154 -0.3077 -0.5538 Suppose George's marginal cost is $4 per shirt. Before the price change, George's initial price markup over marginal cost was approximately . George's desired markup is . Since George's initial markup, or actual margin, was than his desired margin, raising the price was
2. At the price of $15, Zeke were able to sell 7,000 ball pens. When he increased the price by $10, he sold only 5,000 pens. What is the demand elasticity? If his marginal cost is $3 per pen, what is his desired markup and what is his initial actual markup? Was raising the price profitable?
Your Best Brand Bike Shorts-BBB Shorts have been flying off the shelf. Your chiefeconomist tells you that during the Covid-19 pandemic, the taste for bicycling has shifted. Thedemand curve is much more inelastic. The price elasticity of demand has decreased from:-5.76 to -2.70.”Before the campaign your price was $240 per pair of BBB Shorts. What should bethe new price? Please show calculations.
Each scenario gives some information about price elasticity of demand. For each, calculate the missing data, and determine if the price change under consideration will increase, decrease, or not change the firm's total revenue. Honest Abe's Used Cars estimates the price elasticity of demand for their cars to be -4.1. Last month, Abe tried a new marketing scheme which decreased the number of cars sold by 87%. Abe must have his prices by -27.87 Abe's total revenue by increased and total revenue to increased. At Webs-R-Us, a website design company, the new manager has decided to increase the price of Webs-R-Us services by 15%. She estimates that Webs-R-Us has a price elasticity of demand at -0.30. The manager expects the number of websites designed to decrease increase. %. e %
What does the price elasticity of demand indicate? How isthe perfectly inelastic demand curve illustrated . Give an example of a good which has perfectly inelastic demand and write down what the elasticity of perfectlyinelastic demand is equal to. What does the income elasticity of demand indicate ? What is the expected sign for income elasticity of demand for an inferior good ?