Purchase Solution

Application of Price Elasticity of Demand

Not what you're looking for?

Ask Custom Question

The Haas Corporation's executive vice president circulates a memo to the firm's top management in which he argues for a reduction in the price of the firms product. He says such a price cut will increase the firms sales and profits.

A) The firms marketing manager responds with a memo pointing out that the price elasticity of demand for the firms product is about -0.5. Why is this fact relevant?

B) The firms president concurs with the opinion of the executive vice president. Is she correct?

Purchase this Solution

Solution Summary

Solution discusses the implications of price cut in the given case.

Solution Preview

A) The firms marketing manager responds with a memo pointing out that the price elasticity of demand for the firms product is about -0.5. Why is this fact relevant?

Value of price elasticity of demand helps us to understand the relationship between price change and its effect ...

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.