Analyzing impact of price changes on sales
The ABC company manufacture AM/FM clock radios and sell an average 3000 units monthly at $25 each for retail store. it closest competitor produce a similar type of radio that sell for $ 28.
a. if the demand for ABC product has an elasticity coefficient of -3, how many it will sell per month if the price is lowered to 22?
b. the competitor decreases its price to $ 24. if the cross elasticity between the two radios is 0.3 what will ABC's monthly sales be?