Pasta Corporation Recently Changed the Selling Price of One of Its

Essay

Pasta Corporation recently changed the selling price of one of its products. Data concerning sales for comparable periods before and after the price change are presented below. $\begin{array}{cc}\text { Selling Price } & \text { Unit Sales } \\\text { \$56.00 } & 3,000 \\\text { \$61.00 } & 2,590\end{array}$ The product's variable cost is $15.90 per unit.
Required:
a Compute the product's price elasticity of demand as defined in the text.
b. Compute the product's profit-maximizing price according to the formula in the text.