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    inelastic, elastic, and unitary price elasticity

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    The marketing department has discovered that the price elasticity for your company's products in Brazil is expected to be much greater than in current markets served. Separately, your CFO sent you an e-mail earlier in the week stating that depending on how much business your company does abroad, the firm would expose 5 to 20 percent of revenue to currency fluctuations (the Real and Euro are the currencies for Brazil and Germany respectively).

    Both of these issues are of concern to you, so you decide to have a meeting with the VP of Marketing and the CFO. Explain the differences among inelastic, elastic, and unitary price elasticity to the VP and CFO. Then, what questions would you ask? What recommendations would you have for the CFO?

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    https://brainmass.com/economics/exchange-rates/inelastic-elastic-and-unitary-price-elasticity-128384

    Solution Preview

    Let us first understand each of these three terms:

    When the price elasticity of demand for a good is inelastic, the percentage change in quantity is smaller than that in price. Hence, when the price is raised, the total revenue of producers rises, and vice versa.

    When the price elasticity of demand for a good is elastic, the percentage change in quantity is greater than that in price. Hence, when the price ...

    Solution Summary

    Both of these issues are of concern to you, so you decide to have a meeting with the VP of Marketing and the CFO. Explain the differences among inelastic, elastic, and unitary price elasticity to the VP and CFO. Then, what questions would you ask? What recommendations would you have for the CFO?

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