Assume You Are Working at a Department Store and You

question 45

Essay

Assume you are working at a department store and you are told by the manager to cut prices by 20% for all the new women's sweaters that are currently priced at $50. What will be the new price of these sweaters? Suppose the manager tells you to raise the prices back up by 20%. What is the new price of the sweaters? Why is your answer not the same as the original price of the sweaters? What importance does this have for why the midpoint formula is used in calculating price elasticity?

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Definitions:

Milgram

Refers to Stanley Milgram, a psychologist known for his research on obedience to authority, including the famous Milgram experiment.

Replicate

To duplicate a study or experiment to verify its results or to copy a biological or chemical process for scientific or practical purposes.

1960s

A decade marked by significant social, political, and cultural changes, including movements for civil rights, peace, and environmentalism.

Experimenter

An individual who conducts a controlled test or investigation in scientific, psychological, or other research.