Question
Cool Comfort currently sells 300 Class A spas, 460 Class C spas, and 120 deluxe model spas each year. The firm is considering adding a
Cool Comfort currently sells 300 Class A spas, 460 Class C spas, and 120 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that, if it does, it can sell 360 of them. However, if the new spa is added, Class A sales are expected to decline to 240 units while the Class C sales are expected to decline to 260 units. The sales of the deluxe model will not be affected. Class A spas sell for an average of $1200 each. Class C spas are priced at $18 00 and the deluxe model sells for $2200 each. The new mid-range spa will sell for $1250. What is the value of the erosion effect?
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