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Assignment:
Individual Problems
An end-of-aisle price promotion changes the price elasticity of a good from -2 to -3. Suppose the normal price is $26, which equates marginal revenue with marginal cost at the initial elasticity of -2.
What should the promotional price be when the elasticity changes to -3? (Hint: In other words, what price will equate marginal revenue and marginal cost?)
$15.60
$19.50
$11.70
$13.65
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