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Calculate the break-even price elasticity in this situation

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Question - Tryon Manufacturing is considering an 8 percent price increase for a popular product. Management has calculated that the percent breakeven sales level for this price change is a 24 percent decrease from the product's current sales level. Tryon's market research department is currently conducting a study to determine the price elasticity of the market.

Required -

(a) Calculate the break-even price elasticity in this situation. Show your work.

(b) If Tryon's market research department has determined that the brand price elasticity for this product is -2.3, should management go ahead with the proposed 8 percent price increase? Explain your reasoning.

Reference no: EM132750652

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