1. How would the price elasticity equation apply to the purchase price of (a) gasoline, (b)...

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General Management

1. How would the price elasticity equation apply to the purchaseprice of (a) gasoline, (b) an airline ticket, and (c) a checkingaccount?
Give examples of situations that would affect this equation.
2. What would be your response to the statement, "profitmaximization is the only legitimate pricing objective for thefirm."?
3. A marketing manager reduced the price on a brand of cereal by10 percent and observed a 25 percent increase in quantity sold. Themanager then thought that if the price were reduced by another 20percent, a 50 percent increase in quantity sold would occur. Whatwould be your response to the marketing manager's reasoning?

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1 How would the price elasticity equation apply to the purchase price of a gasoline b an airline ticket and c a checking account The price equation determines the degree of responsiveness of a quantity demanded of a good to its price In other words the price equation measures the percentage change in the quantity demanded of a good due to a one percent change in its price Demand is elastic when a percent change in price causes quantity demanded to change by more than a percent Demand is inelastic when a percent change in price causes quantity demanded to See Answer

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