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Learning Goal: I’m working on a economics practice test / quiz and need an explanation and answer to help me learn.
3) You make a lightweight compact foldable windbreaker. Your brand Desert Wind Jackets is
well established in the southwest. In a drive to broaden your appeal and open new markets you
have re-branded under the simple logo DWJ. The strength of your brand, loved by your
customers in the southwest, means you have a price elasticity on demand of -2.76. Market
research indicates that in the upper west, where there is some knowledge of your brand the price
elasticity of demand is -3.50. In New England where you are least known it is estimated that the
price elasticity of demand will be quite high, -5.76. Your marginal cost per jacket is $198.33.
a) What price will you charge in your southwestern region?
b) What price will you charge in your upper western region?
c) What price will you charge in your New England region?