Pasternack Corporation Recently Changed the Selling Price of One of Its

Question

Examlex · Accepted Answer

The Answer is a.% change in quantity = 17.59%
% change in price = -9.62%
Price elasticity of demand =
= ln(1 + % change in quantity sold)/ln(1 + % change in price)
= ln(1 + 17.59%)/ln(1 + -9.62%) = -1.60
b.Profit-maximizing markup on variable cost = -1/(1 + ed) = -1/(1 + (-1.60)) = 1.66
Profit-maximizing price = (1 + Profit-maximizing markup on variable cost) * Variable cost per unit
= (1 + 1.66) = $23.10 = (2.66) * $23.10 = $61.44

Pasternack Corporation Recently Changed the Selling Price of One of Its

Essay

Correct Answer:
Verified

Pasternack Corporation Recently Changed the Selling Price of One of Its

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified