Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 12, Problem 8MC
To determine
Change in price.
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A firm started advertising its product and this changed the product’s elasticity from -2 to -1.5. Using the formula (P – MC)/P = 1/ |e| the firm should
A.
raise price from $10 to $15
B.
reduce price from $15 to $10
C.
raise price from $7.50 to $10
D.
reduce price from $10 to $7.50
Please show me how you got this answer. I got A.
A firm started advertising its product and this changed the product’s elasticity from -2 to -1.5. If, prior to advertising, the firm was maximizing profit by charging $10, the firm should
a. raise price from $10 to $15
b. reduce price from $10 to $6.67
c. raise price from $10 to $13.33
d. reduce price from $10 to $7.50
Note:-
Please refrain from offering handwritten solutions. Please ensure that your response maintains accuracy and quality to avoid receiving a downvote.
Take care of plagiarism.
Answer completely.
You will get up vote for sure.
20. The next year revenue budget for Josiah’s department calls for an increase of 20%. After a great deal of research, he has determined that the price elasticity for his best-selling products is 1.25. In this situation, Josiah should take which following action in order to increase revenue from these products?
Group of answer choices
a. Keep the prices the same
b. Offer a buy one/get one sale
c. Decrease prices
d. Raise prices
Chapter 12 Solutions
Managerial Economics: A Problem Solving Approach
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