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Business selling 10000 units ,plans to reduce the price from 1 to 0.9 . Price elasticity of demand is -1.5 the sales will be?
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Business selling 10000 units ,plans to reduce the price from 1 to 0.9 ...
Understanding Price Elasticity of Demand
Price elasticity of demand measures how responsive the quantity demanded is to a change in price. In this scenario, the price elasticity of demand is -1.5, indicating that for every 1% decrease in price, the quantity demanded will increase by 1.5%.
Current Sales and Price Change
- Current price: $1.00
- New price: $0.90
- Current sales: 10,000 units
Calculating the Percentage Change in Price
- Price decrease: $1.00 - $0.90 = $0.10
- Percentage change in price: (0.10 / 1.00) * 100 = 10%
Estimating the Change in Quantity Demanded
- According to the elasticity of -1.5:
- Quantity demanded change = Price elasticity * Percentage change in price
- Change in quantity demanded = -1.5 * (-10%) = 15%
New Sales Projection
- Increase in sales: 15% of 10,000 units = 1,500 units
- New sales volume: 10,000 units + 1,500 units = 11,500 units
Conclusion
- By reducing the price from $1.00 to $0.90, the sales are projected to increase from 10,000 units to approximately 11,500 units, reflecting a positive response to the price drop due to the price elasticity of demand being -1.5.
Price elasticity of demand measures how responsive the quantity demanded is to a change in price. In this scenario, the price elasticity of demand is -1.5, indicating that for every 1% decrease in price, the quantity demanded will increase by 1.5%.
Current Sales and Price Change
- Current price: $1.00
- New price: $0.90
- Current sales: 10,000 units
Calculating the Percentage Change in Price
- Price decrease: $1.00 - $0.90 = $0.10
- Percentage change in price: (0.10 / 1.00) * 100 = 10%
Estimating the Change in Quantity Demanded
- According to the elasticity of -1.5:
- Quantity demanded change = Price elasticity * Percentage change in price
- Change in quantity demanded = -1.5 * (-10%) = 15%
New Sales Projection
- Increase in sales: 15% of 10,000 units = 1,500 units
- New sales volume: 10,000 units + 1,500 units = 11,500 units
Conclusion
- By reducing the price from $1.00 to $0.90, the sales are projected to increase from 10,000 units to approximately 11,500 units, reflecting a positive response to the price drop due to the price elasticity of demand being -1.5.
Community Answer
Business selling 10000 units ,plans to reduce the price from 1 to 0.9 ...
11500
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Business selling 10000 units ,plans to reduce the price from 1 to 0.9 . Price elasticity of demand is -1.5 the sales will be?
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Business selling 10000 units ,plans to reduce the price from 1 to 0.9 . Price elasticity of demand is -1.5 the sales will be? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Business selling 10000 units ,plans to reduce the price from 1 to 0.9 . Price elasticity of demand is -1.5 the sales will be? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Business selling 10000 units ,plans to reduce the price from 1 to 0.9 . Price elasticity of demand is -1.5 the sales will be?.
Business selling 10000 units ,plans to reduce the price from 1 to 0.9 . Price elasticity of demand is -1.5 the sales will be? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Business selling 10000 units ,plans to reduce the price from 1 to 0.9 . Price elasticity of demand is -1.5 the sales will be? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Business selling 10000 units ,plans to reduce the price from 1 to 0.9 . Price elasticity of demand is -1.5 the sales will be?.
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