7.Emerson Inc. is a catalog retailer of a wide variety of sporting goods and recreational products.Although the market response to the company's spring catalog was generally good, sales of Emerson's $280 deluxe garment bag declined from 20,000 to 9,600 units.During this period, a competitor offered a whopping $104 off their regular $274 price on deluxe garment bags.

A.Emerson's deluxe garment bag sales recovered from 9,600 units to 12,000 units following a price reduction to $260 per unit.Calculate Emerson's arc price elasticity of demand for this product.

B.Assuming the same arc price elasticity of demand calculated in Part B, determine the further price reduction necessary for Emerson to fully recover lost sales (i.e., regain a volume of 20,000 units)