Jun Bum Kwon (who goes by "JB") is a product manager at Tyyppe, a manufacturer of high-end mechanical keyboard components. JB oversees thePolybutylene Terephthalate (PBT) keycaps product line. PBT is a shine-resistant plastic preferred by keyboard enthusiasts. The CMO at Tyyppe is considering revising the pricing for PBT keycaps and has asked JB to organize their price and quantity data for PBT keycaps. JB provides the CMO with the monthly PBT keycap set sales and monthly average price per keycap figures:

Monthly Total PBT Keycap Set Sales	Monthly Average Price per Keycap
393	0.866
307	0.985
350	0.971
300	1.029
392	0.849
396	0.888
335	0.938
342	0.939
357	0.940
314	0.993

The CMO assumes that there are no time series aspects of the data that need to be analyzed and that Tyyppe faces a demand curve with constant elasticity. He also recalls that it costs Tyyppe forty cents to manufacture each keycap.

Question:

What is the price elasticity of demand for Tyyppe's PBT keycaps?

Using Tucker's "rule of thumb", what price per keycaps should Tyyppe set for it's PBT keycaps?

https://ocw.mit.edu/courses/15-818-pricing-spring-2010/59dd681ca6c787b8a7a5f669974b0f77_MIT15_818S10_lec04.pdf

Answer rating: 100% (QA)

To calculate the price elasticity of demand for Tyyppes PBT keycaps we can use the formula Price Ela... View the full answer