Illustrate what implicit assumptions are the publisher

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Reference no: EM1355782

In an article about the financial problems of USA Today, Newsweek reported that the pa-per was losing about $ 20 million a year. AWall Street analyst said that the paper should raise its price from 50 cents to 75 cents, which he estimated would bring in an addi-tional $ 65 million a anaddi-tional$65milliona year. The paper's publisher rejected the idea, saying that circulation could drop sharply after a price increase, citing The Wall Street Journal's experience after it increased its price to 75 cents. Illustrate what implicit assumptions are the publisher and the analyst making about price elasticity?

Reference no: EM1355782

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