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    Calculating point elasticity and optimal price

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    Richardson's Stores, Inc. cut prices on Men's Runnng shoes by 2 percent during the first quarter and enjoyed a 4-percent increase in unit sales over the period as compared to a year earlier

    a.Calculate the point price elasticity of demand for Richardson's Stores, Inc

    b. Calculate the company's optimal shoe price if marginal cost is $10 per unit

    © BrainMass Inc. brainmass.com December 24, 2021, 8:00 pm ad1c9bdddf
    https://brainmass.com/business/business-management/calculating-point-elasticity-optimal-price-236892

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    Solution:

    Point Elasticity = (% change in Quantity) / (% change in Price)
    %change in quantity demanded/%change in price=4%/-2%=-2

    Calculate the company's optimal shoe price if marginal cost is $10 per unit

    Optimal Price=MC*(Ed/(Ed+1))=10*(-2/(-2+1))=10*2=$20

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 8:00 pm ad1c9bdddf>
    https://brainmass.com/business/business-management/calculating-point-elasticity-optimal-price-236892

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