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The Stop decay company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decay fighter, reduced the price of its electric toothbrush from $35 to $30. As a result, stop decay's sales declined by 1,500 units per month.
If Stop decay knows that the arc price elasticity of demand for its toothbrush is -1.5. What price would Stop decay have to charge to sell the same number of units as it did before the Decay fighter price cut? Assume that Decay fighter holds the price of its toothbrush constant at $30.
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