Question
An end-of-aisle price promotion changes the price elasticity of a good from 3 to 4. Suppose the normal price is $36, which equates marginal revenue
An end-of-aisle price promotion changes the price elasticity of a good from 3 to 4. Suppose the normal price is $36, which equates marginal revenue with marginal cost at the initial elasticity of -3.
What should the promotional price be when the elasticity changes to -4? (Hint: In other words, what price will equate marginal revenue and marginal cost?)
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Microeconomics Principles, Problems and Policies
Authors: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn
20th edition
978-0077660819, 77660811, 978-1259450242
