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An inquiry arrived from a client, Noise Unlimited Inc. This firm sells luxury stereo systems through its retail outlets. At a price of $800 per system, NU, Inc. sold about 600 systems per month. The new general manager for this product, Eli Sticity, decided that they needed more revenues and increased price to $1200. However NU, Inc. is now only selling 100 systems per month at that price. What is the price elasticity for this product (need to calculate this and show your work?) Define price elasticity and explain how it should be used for pricing this product. What do you recommend for the pricing of this product (i.e. Should it stay at $1200, be increased, decreased, how do we find the optimal price?)
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