Nicklos Corporation's marketing manager believes that every 7% decrease in the selling price of one of the company's products would lead to a 10% increase in the product's total unit sales.The product's absorption costing unit product cost is $18.60.The variable production cost is $7.60 per unit and the variable selling and administrative cost is $4.90.
Required:
a.Compute the product's price elasticity of demand as defined in the text.
b.Compute the product's profit-maximizing price according to the formula in the text.

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The Answer of Nicklos Corporation's marketing manager believes that every 7% decrease in the selling price of one of the company's products would lead to a 10% increase in the product's total unit sales.The product's absorption costing unit product cost is $18.60.The variable production cost is $7.60 per unit and the variable selling and administrative cost is $4.90.
Required:
a.Compute the product's price elasticity of demand as defined in the text.
b.Compute the product's profit-maximizing price according to the formula in the text.

Nicklos Corporation's Marketing Manager Believes That Every 7% Decrease in the Selling