Explore BrainMass
Share

Explore BrainMass

    Implicit assumptions about price elasticity of demand

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

    In an article about the financial problems of USA Today, Newsweek reported that the paper was losing about $20 million a year. A Wall Street analyst said that the paper should raise its price from 50 cents to 75 cents, which he estimated would bring in an additional $65 million a year. The paper's publisher rejected the idea, saying that circulation could drop sharply after a price increase, citing The Wall Street Journal's experience after it increased its price to 75 cents. What implicit assumptions are the publisher and the analyst making about price elasticity?

    © BrainMass Inc. brainmass.com October 10, 2019, 12:49 am ad1c9bdddf
    https://brainmass.com/economics/demand-supply/implicit-assumptions-about-price-elasticity-of-demand-308694

    Solution Preview

    Wall street analyst said that an increase in price will increase total ...

    Solution Summary

    Solution lists implicit assumptions made by publisher and the analyst.

    $2.19