You are the manager of firm Equis. Firm Zeta is your main competitor. You have the following information about your firm: price elasticity of demand is -1.25 income elasticity is 0.43, and cross-price elasticity between your firm and firm Zeta is 1.22. One of your subordinates approaches you with the proposal of temporarily lowering the price of your product in an effort to increase sales revenue. Which of the following statements is true? OA. Firm Equis sells a luxury good. OB. Firm Equis sells an inferior good. O C. If your goal is to increase sales revenue, you should not follow this recommendation. OD. If your goal is to increase sales revenue, you should follow this recommendation. E. None of the above

You are the manager of firm Equis. Firm Zeta is your main competitor. You have the following information about your firm: price elasticity of demand is -1.25 income elasticity is 0.43, and cross-price elasticity between your firm and firm Zeta is 1.22. One of your subordinates approaches you with the proposal of temporarily lowering the price of your product in an effort to increase sales revenue. Which of the following statements is true? OA. Firm Equis sells a luxury good. OB. Firm Equis sells an inferior good. O C. If your goal is to increase sales revenue, you should not follow this recommendation. OD. If your goal is to increase sales revenue, you should follow this recommendation. E. None of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume lawyer services have an elasticity of demand of 2.0 in absolute value. Currently, a lawyer charges $300 per consultation and she has 100 consultations per week. If she raises her rate to $375 perconsultation (a 25% increase) her revenue wil (use the general formula for elasticity not the midpoint formula)rise from s30.000 per week to $31500 per weekrise from $30.000 per week to $33750 per weekfall from $30.000 per week to $18750 per weekfal from $30,000 per week to s26000 per week
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Nn.47. Subject :- Economy
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