Increasing Profits with a Price Elasticity of Demand

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• Price Elasticity of Demand and Increasing Profits

  449902 Price Elasticity of Demand and Increasing Profits A company currently sells 60,000 units a month at $10 per unit. The marginal cost per unit is $6. The company is considering raising the price by 10% to $11.

• The price elasticity of demand

  Answer: True The price elasticity of demand measures the proportion of change in demand to the change in price. Thus it shows the responsiveness of demand to the price.

• Selecting the better strategy

  Reduce price by 20%; price-demand elasticity is -3.0 Which of two strategies will generate highest overall profits?

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  Since the own-price elasticity is approximately -3, increasing the price by 1% reduces the number of tickets sold by 3%.

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  One of the ways is to increase the price of an item. This idea of increasing the price of a product is very tempting to many decision makers.

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  price elasticity of demand is .85 and is inelastic E) then the good is a normal good 9.

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  I'm not sure what the cross-price elasticity was paired with, so I assume it is used jets, which can be taken to be a good substitute for new jets.

• Increasing-cost industry

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• Problems using price and income elasticity

  320933 Problems using price and income elasticity FIRST QUESTION Assuming the price elasticity of a companyâ??s product is between -0.3 and -0.4 and the income elasticity of demand is 0.5: 1.