Optimal Price. Woofer-Tweeter, Inc., recently offered instant rebates of $25 off the regular $1,000 price on Soundman CD players. Sales responded, rising 6.25% over the previous month's level.
A. Calculate the point price elasticity of demand for Soundman CD players.
B. If marginal cost per unit is $600, was the original $1,000 price optimal?

Question

Quizplus · Accepted Answer

The Answer of Optimal Price. Woofer-Tweeter, Inc., recently offered instant rebates of $25 off the regular $1,000 price on Soundman CD players. Sales responded, rising 6.25% over the previous month's level.
A. Calculate the point price elasticity of demand for Soundman CD players.
B. If marginal cost per unit is $600, was the original $1,000 price optimal?