Vik and Fleet produce trainers in the sports-shoe market. For one of their main products they have the following demand curves: Vik PV = 175 _ 1.2QV Fleet Pf = 125 _ 0.8Q f where P is in Br and Q is in pairs per week. The firms are currently selling 80 and 75 pairs of their products per week respectively. a. What are the current price elasticity’s for the products? b. Assume that Vik reduces its price and increases its sales to 90 pairs and that this also causes a fall in Fleet’s sales to 70 pairs per week. What is the cross-elasticity between the two products? c. Is the above price reduction by Vik to be recommended? Explain your answer.
Answers
Answer:
==>> Vik and Fleet product trainer in the sports shoe market . for one of their main products they they have the following demand curves
==>> Vik Pv =175 – 1.2Qv
==>> Fleet pf = 125 – 0.8Qf
Where p is in£ and Q is in pairs per week
The firm are currently selling 80 and 75 pairs of thire products per week respectively
A .what are the current price elastic ties for the products
B. Assume that the VIK reduces its price and increase its sell to 90pairs and that this also cause a fall in Fleet’s sales to 70 pairs per week that is the cross elasticity between the two products
C. Is the above price
Answer:
==>> Vik and Fleet product trainer in the sports shoe market . for one of their main products they they have the following demand curves
==>> Vik Pv =175 – 1.2Qv
==>> Fleet pf = 125 – 0.8Qf
Where p is in£ and Q is in pairs per week
The firm are currently selling 80 and 75 pairs of thire products per week respectively
A .what are the current price elastic ties for the products
B. Assume that the VIK reduces its price and increase its sell to 90pairs and that this also cause a fall in Fleet’s sales to 70 pairs per week that is the cross elasticity between the two products
C. Is the above price