b) If price elasticity of demand (PED) is -1.7, it is feasible that a company cuts the price by 5% in order to generate enough total revenue.
1
Expert's answer
2016-03-30T08:19:04-0400
If the company cuts the price by 5%, demand will rise by 8,5%. Without the price cut the total revenue is: PQ and after the price cut becomes: (1-5%)P * (1+8.5%)Q = 0.95P*1.085Q = 1.03075PQ By cutting the price by 5% the company increases the total revenue by 3.075%
Answer: it is feasible that the company cuts the price by 5%
Numbers and figures are an essential part of our world, necessary for almost everything we do every day. As important…
APPROVED BY CLIENTS
"assignmentexpert.com" is professional group of people in Math subjects! They did assignments in very high level of mathematical modelling in the best quality. Thanks a lot
Comments
Leave a comment