HEB grocery company decides to run a price promotion for 20-ounce bottle

of Coca Cola. They know the elasticity of demand for Coke is -1.4. During the price

promotion, they expect to sell 28% more bottles. Before the price drop, they sold

100,000 bottles.

i)

For them to be able to achieve this increased sale of bottles, what would the

percentage change in price be?

ii)

If the price before the promotion was $1.00 per bottle, what is the new price per

bottle?

iii)

Calculate the revenue before the price drop.

iv)

Calculate the revenue after the price drop.

v)

Is the price drop a good marketing strategy, given all else is same?