What is the price elasticity of the toyota prius

Assignment Help Finance Basics

Reference no: EM131797496

Question: Tess is the product manager for the Toyota Prius. Honda has recently launched its own hybrid car which has proved to be a capable competitor to the Prius. Since the Honda launch, Tess has noticed that her sales have been slowing. She is considering dropping her price from its current level $24,000 to a new reduced level $18,000 in order to better compete with the Honda hybrid which is priced at $18,500. Before she does so, she wants to understand how price sensitive consumer demand is for the Toyota Prius.

At the $24,000 price, Tess has been able to sell 60,000 units per year. When the Prius was first launched, it was priced much higher at $30,000. During its first year at that price point, it sold 40,000 units.

What is the price elasticity of the Toyota Prius at the $24,000 price level? Is the Prius price elastic or price inelastic? How many units should Tess expect to sell at the $18,000 price point, assuming a linear demand curve?

Reference no: EM131797496

Questions Cloud

What are the four sources of long-term debt financing : What is a public taxable bond? What are the four sources of long-term debt financing

Determine the net present value of the two investment : Using present value techniques to evaluate alternative investment opportunities. Determine the net present value of the two investment alternatives

Find and compare the percentages that had a bad result : Test the hypothesis that the drug reduced the chance of a bad result compared to the placebo using a significance level of 0.05.

Submitting only electronic claims : Do you think your doctor will lose money once he starts submitting only electronic claims? Support your answer with evidence.

What is the price elasticity of the toyota prius : What is the price elasticity of the Toyota Prius at the $24,000 price level? Is the Prius price elastic or price inelastic?

What was texas instruments corporate-level strategy : What was Texas Instruments’ corporate-level strategy in regards to entering the personal computer market?

How much are the budgeted cash disbursements for december : How much are the budgeted cash disbursements for December

Prepare a schedule showing the reduction of the liability : Prepare a schedule showing the reduction of the liability by the annual payments after considering the interest charges.

Find out about different sources for grants : What is a grant and how is it different from other kinds of donations? Where can you find out about different sources for grants?

User Account

All Pages