Question #43819
The ABC company manufactures AM/FM clock radios and sells on average 3,000 units monthly at Rs.25 each to retail stores. Its closest competitor produces a similar type of radio that sells for Rs.28.
a) If the demand for ABC product has an elasticity coefficient of -3, how many will it sell per month if the price is lowered to Rs.22?
b) The competitor decreases the price to Rs.24. If cross-elasticity between the two radios is 0.3 what will the ABC's monthly sales be??
a) If the demand for ABC product has an elasticity coefficient of -3, how many will it sell per month if the price is lowered to Rs.22?
b) The competitor decreases the price to Rs.24. If cross-elasticity between the two radios is 0.3 what will the ABC's monthly sales be??
Expert's answer
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#339914 on Dec 2023
#339914 on Dec 2023
Comments
Dear Nimo, (Q2-3000)*(-0.3/13) = -0.3/13Q2 + 900/13 Here we can multiply -0.3/13Q2 by 10/10: -(0.3*10)/(13*10)Q2 = -(3)/(130)Q2
-3/130Q2? How it come?