Answer:
The answer is below
Explanation:
The graph is attached below.
a) The price elasticity of demand is given by:
price elasticity of demand =
Price of elasticity demand =
Price of elasticity demand =
Since the price of elasticity demand > 1, it is elastic
b) Price of elasticity demand =
Since the price of elasticity demand = 1, it is unitary
c) Price of elasticity demand =
Since the price of elasticity demand < 1, it is inelastic
Answer:
$11880
Explanation:
Given that:
In a local Honda Dealership;
Last year, your dealership earned a record profits of $1.5 million
according to the local Chamber of Commerce, your earnings were 10 percent less than either of your competitors.
The Price Elasticity of demand E = - 4.5
Marginal cost of a midsized automobile = $11,000
Let assume that In your market, you compete against two other dealers
From The above given data , the objective is to determine the What price should you charge for a midsized automobile if you expect to maintain your record sales.
So; in order to achieve that ; we consider the scenario of an Oligopoly market by using the markup formula for homogeneous product Cournot Oligopoly which can be represented as:
P = 1.08 × 11000
P = $11880
Hence. the price you should charge for a midsized automobile if you expect to maintain your record sales is $11880