Smaci's Inc., is a catalog retailer of clothing. In an audit of sales data, the company noted the sale of its popular $184 sports jacket fell to 2,000 units form 5,000 units sold last season. The sales downturn was caused by department store competitors who reduced their average price on similar items from $200 to $150 per unit.

A. Calculate Smaci's arc price elasticity of demand for this product if sales rebounded from 2,000 units from 4,000 units following a price reduction from $184 to $161 per unit.

B. Calculate the maximum price Smaci's could offer on this item and still fully recover lost sales. (i.e. regain volume of 5,000 units)

C. Holding all else equal would a further reduction in price result in higher or lower total revenue? Explain.

C.Holding all else equal would a further reduction in price result in higher or lower total revenue? Explain.