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Leicester City Garage (LCG) currently sells 700 of its 'Model A' car per month at a price of 25,000 each. LCG's marketing team suggest
Leicester City Garage (LCG) currently sells 700 of its 'Model A' car per month at a price of 25,000 each. LCG's marketing team suggest that if the price was reduced to 22,500, then LCG could sell 773 'Model A' cars. (a) [4 marks] Calculate the average price elasticity of demand for 'Model A' implied by this information. (b) [2 marks] Calculate the monthly revenue at the original price and the reduced price. (c) [3 marks] Comment on your answers for (a) and (b).
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Fundamentals of corporate finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
9th edition
978-0077459451, 77459458, 978-1259027628, 1259027627, 978-0073382395
