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The manager of a men's clothing catalog measured the market's response to a $6 increase in the usual price of his company's oxford shirts by conducting a sales experiment. An A-B split was used to divide the company's 80,000-customer mailing list into two groups. Customers in the control group were sent catalogs listing oxford shirts at their usual price of $30. Customers in the test group were sent catalogs listing the price of oxford shirts at $36. During the test period, customers in the control group purchased 650 oxford shirts, and customers in the test group purchased 507 oxford shirts.
Problem (a) What is the independent variable in this sales experiment? What is the dependent variable in this sales experiment?
Problem (b) What is the percent change in price in this experiment? Show your work. Problem (c) What is price elasticity indicated by the results of this experiment. Show your work.
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