Question

In an effort to reduce excess end-of-the-model-year inventory, Harrison Ford offered a 1% discount off the average price of 4WD Escape Gas-Electric Hybrid SUVs sold during the month of August. Customer response was wildly enthusiastic, with unit sales rising by 10% over the previous month's level.
A. Calculate the point price elasticity of demand for Harrison Ford 4WD Escape Gas-Electric Hybrid SUVs sold during the month of August.
B. Calculate the profit-maximizing price per unit if Harrison Ford has an average wholesale (invoice) cost of $23,500 and incurs marginal selling costs of $350 per unit.



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  • CreatedFebruary 13, 2015
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