Calculating arc price elasticity of demand
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Arc Price Elasticity. Assume that amazon.com cut the price on a 1.10 ct Princess Cut Diamond Solitaire engagement ring from $4,500 to $2,500, and sales rose from 50 to 75 units per week.
A. Calculate the implied arc price elasticity of demand.
B. Is a further price decrease warranted? Why or why not?
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Solution describes the steps to calculate arc price elasticity of demand.
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Please refer attached file for missing formulas.
A. Calculate the implied arc price elasticity of demand.
Initial Price=P1=$4500
Final Price=P2=$2500
Initial Quantity demanded=Q1=50
Final Quantity ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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