Q1. Cost Mart reduces the cost of a 42 inch TV Plasma from $1,200 to $1,000. As a result sales of TV Plasmas increased from 30 units a month to 42 units a month. Calculate the cost elasticity of demand as well as for TV Plasmas. How could we classify the demand as well as for TV Plasmas?
Q2. COST MART offered a whopping 10% discount on the average cost of TV Plasma for father's day. Customer response was so enthusiastic that unit sales rose by 15% over the previous month's level,
a. Calculate the point cost elasticity of demand as well as for TV Plasma during the month of the discount.
b. Calculate the profit maximizing cost per unit if COST MART has an average wholesale cost of $350 as well as incurs marginal selling cost of $100 per unit
.