Optimal Price. Japanese Imports, Inc., recently offered rebates of $375 off the regular $25,000 price on Sayonara mini SUVs. Sales responded, rising 12% over the previous month's level.
A. Calculate the point price elasticity of demand for Sayonara vehicles.
B. If marginal cost per unit is $21,875, was the original $25,000 price optimal?

Question

Quizplus · Accepted Answer

The Answer of Optimal Price. Japanese Imports, Inc., recently offered rebates of $375 off the regular $25,000 price on Sayonara mini SUVs. Sales responded, rising 12% over the previous month's level.
A. Calculate the point price elasticity of demand for Sayonara vehicles.
B. If marginal cost per unit is $21,875, was the original $25,000 price optimal?