Q. EXERCISE 1
Price Mart reduces the price of a 42 inch TV Plasma from $1,200 to $1,000. As a result sales of TV Plasmas increased from 30 units a month to 42 units a month. Compute the price elasticity of demand for TV Plasmas. Explain how could we classify the demand for TV Plasmas?
EXERCISE 2
PRICE MART offered a whopping 10% discount on the average price of TV Plasma for fathers day. Customer response was so enthusiastic that unit sales rose by 15% over the previous month's level,
a. Calculate the point price elasticity of demand for TV Plasma during the month of the discount.
b. Calculate the profit maximizing price per unit if PRICE MART has an average wholesale cost of $350 and incurs marginal selling cost of $100 per unit