Leicester City Garage (LCG) currently sells 700 of its 'Model A' car per month at a...
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Leicester City Garage (LCG) currently sells 700 of its 'Model A' car per month at a price of £25,000 each. LCG's marketing team suggest that if the price was reduced to £22,500, then LCG could sell 773 'Model A' cars. (a) [4 marks] Calculate the average price elasticity of demand for 'Model A' implied by this information. (b) [2 marks] Calculate the monthly revenue at the original price and the reduced price. (c) [3 marks] Comment on your answers for (a) and (b). Leicester City Garage (LCG) currently sells 700 of its 'Model A' car per month at a price of £25,000 each. LCG's marketing team suggest that if the price was reduced to £22,500, then LCG could sell 773 'Model A' cars. (a) [4 marks] Calculate the average price elasticity of demand for 'Model A' implied by this information. (b) [2 marks] Calculate the monthly revenue at the original price and the reduced price. (c) [3 marks] Comment on your answers for (a) and (b).
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Related Book For
Fundamentals of corporate finance
ISBN: 978-0073382395
9th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Posted Date:
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