How the price cut will increase the firms sales and profits

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Reference no: EM13186831

The Haas Corporation's executive vice president circulates a memo to the firm's top management in which he argues for a reduction in the price of the firm's product. He says such a price cut will increase the firm's sales and profits.

a. The firm's marketing manager responds with a memo pointing out that the price elasticity of demand for the firm's product is about -0.5. Why is this fact relevant?

b. The firm's president concurs with the opinion off the executive vice president. Is she correct?

Reference no: EM13186831

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