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Notprepared and Unsure Inc. manufacture widgets which are sold thorough wholesalers and hardware stores. Their current monthly operating data are as follows: NUI is contemplating
Notprepared and Unsure Inc. manufacture widgets which are sold thorough wholesalers and hardware stores. Their current monthly operating data are as follows: NUI is contemplating a 10% price reduction to spur sales. 1. What is the percent break-even sales change? [Show calculations] 2. What is the unit break-even sales change? [Show calculations] NUI had commissioned a study last month to estimate the price elasticity for widgets in its current market. The study suggested that the price elasticity for widgets was between -1.8 and -2.0. Do you recommend NUI proceed with the proposed price cut? Why or why not
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