Market-level price elasticity of demand

Assignment Help Business Economics

Reference no: EM13837722

You are the owner of a local Honda dealership. Unlike other dealerships in the area, you take pride in your No Haggle sales policy. Last year, your dealership earned record profits of $1.5 million. In your market, you compete against two other dealers, and the market-level price elasticity of demand for midsized Honda automobiles is -1.3. In each of the last five years, your dealership has sold more midsized automobiles than any other Honda dealership in the nation. This entitled your dealership to an additional 30 percent off the manufacturers’ suggested retail price (MSRP) in each year. Taking this into account, your marginal cost of a midsized automobile is $12,000.

What price should you charge for a midsized automobile if you expect to maintain your record sales?

Reference no: EM13837722

Questions Cloud

What is meant by sufficient appropriate audit evidence : Explain what is meant by sufficient appropriate audit evidence. Discuss what you understand by reliability of audit evidence and how the reliability of audit evidence may be influenced.

Consumers become more carbohydrate-conscious : Suppose cookie sales fall as consumers become more carbohydrate-conscious. If the cookie industry is a constant-cost, perfectly competitive industry, this decline in market demand will cause market supply to?

Socratic analysis paper on the nature of personal freedoms : Socratic Analysis Paper on the Nature of Personal Freedoms-In this course, we learn about philosophers and philosophies, but we also strive to be philosophical

Two of the largest distillers of premium scotch liquor : Suppose the European Union (EU) is investigating a proposed merger between two of the largest distillers of premium Scotch liquor. Based on some economists definition of the relevant market, the two firms proposing to merge enjoyed a combined market ..

Market-level price elasticity of demand : You are the owner of a local Honda dealership. Unlike other dealerships in the area, you take pride in your No Haggle sales policy. Last year, your dealership earned record profits of $1.5 million. What price should you charge for a midsized automobi..

Several units of homogeneous product as single package : A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 80 - 0.25P, and the marginal cost of production is $120. Determine the optimal number of units to put in..

Describe affirmative action program : 1. Describe affirmative action program (AAP). What is its primary objective? 2. What is motivation? Describe some common ways by which organization try to motivate their employees.

Markups and prices under third-degree price discrimination : You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1s elasticity of demand is -4, while group 2s is -3. Your marginal cost of producing the product is $20. Determine your optimal..

Business research for decision making : How I will approach assignment (Unit 5), will be by reviewing my notes that I have taken throughout the course. Using the learning materials and reading materials provided by this course and instructor.

User Account

All Pages