1. Buy & Large typically sells 800,000 packs of batteries per month. Two months ago, it raised the price of a pack from
Posted: Thu Apr 28, 2022 12:21 pm
1. Buy & Large typically sells 800,000 packs of batteries
per month. Two months ago, it raised the price of a pack from $5 to
$6. Last month it sold 600,000.
a. What was B&L’s monthly revenue prior to the price rise?
After?
b. What is the price elasticity of demand for B&L’s
batteries?
c. Is the demand curve for batteries elastic or inelastic
between $5 & $6, and why?
d. Suppose that B&L finds a way to make $1 million of profit
on batteries per month. How will the market for batteries react to
this, and why?
per month. Two months ago, it raised the price of a pack from $5 to
$6. Last month it sold 600,000.
a. What was B&L’s monthly revenue prior to the price rise?
After?
b. What is the price elasticity of demand for B&L’s
batteries?
c. Is the demand curve for batteries elastic or inelastic
between $5 & $6, and why?
d. Suppose that B&L finds a way to make $1 million of profit
on batteries per month. How will the market for batteries react to
this, and why?