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In article about the financial problems of USA Today, Newsweek reported that the paper was losing about $20 million a year. A Wall Street analyst said that the paper must raise its price from 50 cents to 75 cents, which he estimates would bring in an additional $65 million a year. The paper's publisher rejected the idea saying that the circulation could drop sharply after a price increase, citing The Wall Street Journal's experience after its increased its price to 75 cents What implicit assumptions are the publisher and the analyst making about price elasticity?

Microeconomics, Economics

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