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Price elasticities and revenue

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Reference no: EM133066778

Problem 1: Price Elasticities and Revenue

A company has experimented with 4 different prices.

At a price of $19, 36 percent of potential customers purchase.  And so on.

price

quantity

% ? price

% ? quantity

%? quantity / % ? price

revenue

$19

0.36

e.g., (39-19)/19

e.g., (0.32-0.36)/0.36

 

 

$39

0.32

 

 

 

 

$59

0.27

 

 

 

 

$99

0.24

 

 

 

 
  1. Calculate the percent change in price as price rises, for example, from $19 to $39.
  2. Calculate the percent change in quantity as the price rises, for example, from $19 to $39.
  3. Calculate the implied price elasticity estimate (%? quantity / % ? price) between each successive price.
  4. Calculate the revenue (per customer) at each price.
  5. What are your thoughts about the revenue maximizing price?

Reference no: EM133066778

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