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In an effort to increase profits, the Mid - Central Electric Co . is trying to decide whether to ask the Public Utilities Commission for
In an effort to increase profits, the MidCentral Electric Co is trying to decide whether to ask the Public Utilities Commission for permission to raise its rates. Some managers feel that a rate increase will not increase profits because higher rates will cause their customers to use less electricity, but other managers disagree.Finally, the numbers are in: The director of marketing has determined that the breakeven sales level for a rate increase of percent would be a unit sales loss of percent. The market research department has determined that the price elasticity of MidCentral's market is Calculate the sales change indicated by a price elasticity of and use these numbers to determine whether or not it would increase MidCentrals profits to raise rates by percent. Show your work.
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