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Point Elasticity and Arc Elasticity

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Please show the work in answering the below questions. Thank you.

1. B. B. Lean's deluxe garment bag sales recovered from 4,800 units to 6,000 units following a price reduction from $140 to $130 per unit. Calculate B. B. Lean's arc price elasticity of demand for this product.

2. Calculate point price elasticity of demand for this product.

3. Assuming the same arc price elasticity of demand calculated in Part A, determine the further price reduction necessary for B. B. Lean to gain a volume of 10,000 units.

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Solution Summary

Point Elasticity and Arc Elasticity are formulated.

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1. Arc Elasticity = [(Q2-Q1)/(Q2+Q1)] * [P1+P2]/[P2-P1]
=((6000-4800)/(6000+4800)) * ...

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