Explore BrainMass
Share

# Analyzing impact of price changes on sales

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

The ABC company manufacture AM/FM clock radios and sell an average 3000 units monthly at \$25 each for retail store. it closest competitor produce a similar type of radio that sell for \$ 28.

a. If the demand for ABC product has an elasticity coefficient of -3, how many it will sell per month if the price is lowered to 22?

b. The competitor decreases its price to \$ 24. if the cross elasticity between the two radios is 0.3 what will ABC's monthly sales be?

https://brainmass.com/economics/elasticity/analyzing-impact-price-changes-sales-318017

#### Solution Preview

a. If the demand for ABC product has an elasticity coefficient of -3, how many it will sell per month if the price is lowered to 22?

% change in price=(22-25)/25=-12.00%
% change in demand=% change in price*price ...

#### Solution Summary

Solution describes the methodology to study the impact of price changes on sales with the use of elasticity concepts.

\$2.19