3. The Kitchen Kingdom sells its deluxe food processor for £150/unit. Company experience suggests that both price and consumer incomes affect sales, with an estimated price elasticity of demand of -3.0, whilst income elasticity is estimated at 4.0. In 1986 the company sold one million units, whilst total consumer disposable income was £600 billion.

a. The estimated consumer disposable income for 1987 is £650 billion. Assuming price remains the same in 1987, estimate total sales revenue

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Price elasticity of demand basically measure the responsiveness of demand to the changes in the price levels It is found out by dividing the percentag... View the full answer