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Calculating increase in sales volume and price elasticty

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Angelica pickles manager a Quick copy franchise White Plains, New York. Pickles projects reducing copy 5¢ to 4¢ each, Quick Copy's $600-per-week profit contribution will increase by one-third.

A. If average variable costs are 2¢ per copy, calculate Quick Copy's projected increase in volume.
B. What is Pickles' estimate of the arc price elasticity of demand for copies?

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Solution calculates projected increase in sales volume and arc price elasticity of demand.

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A. If average variable costs are 2¢ per copy, calculate Quick Copy's projected increase in volume.

Initial profit contribution=CM1=$600
Increase in profit contribution=1/3 rd of ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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