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# Elasticity

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Beagle, Inc., is a catalog retailer of distinctive women's clothing. In an audit of Christmas season sales data, the company noted that sales of its popular \$184 Harris Tweed sports jacket fell to 2,000 units form the 5,000 units sold last season. Apparently, this sales downturn was caused by department store competitors who reduced their average price on similar items from \$200 to \$150 per unit.

a. Calculate the arc cross-price elasticity of demand for this product
b. Calculate Beagle's arc price elasticity of demand for this product if sales rebounded from 2,000 to 4,000 units following a price reduction to \$161 per unit.
c. Calculate the maximum lost sales (i.e. regain a volume of 5,000 units).

##### Solution Summary

The solution calculates a number of elasticities for the given scenario.

##### Solution Preview

Change in Quantity/Change in Price of Competitors
= 5000-2000/200-150
= 3000/50
= ...

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