Optimal Price

question 6

Essay

Optimal Price. Lean Jeans, Inc., recently offered rebates of $1 off the regular $50 price on their low-rider jeans. Sales responded, rising 4% over the previous month's level.
A. Calculate the point price elasticity of demand for Lean Jeans.
B. If marginal cost per unit is $20, was the original $50 price optimal?

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Definitions:

Profit-Maximizing Price

The price point at which a company can sell its product or service to achieve the highest possible profit.

High Speed Internet

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Cable Television

A system for delivering television programming to paying subscribers via radio frequency signals transmitted through coaxial cables or digital light pulses.

Oligopolists

Companies or entities that dominate an oligopoly, controlling significant market share and influencing prices and competition.