School

Ryerson UniversityDepartment

MarketingCourse Code

MKT 300Professor

Armand GervaisStudy Guide

MidtermThis

**preview**shows half of the first page. to view the full**2 pages of the document.**The owner of a car wash wants to increase his Revenue. He

decides to do this by increasing the price of deluxe car washes

by $1.00. Currently he charges $10.99 for the Deluxe Car

wash. In a typical week he sells 100 deluxe car washes. He

knows from previous experience his sales will decrease to 85

deluxe car washes per week. The other variable costs per car

wash are $1.99 which includes all chemicals and labour costs.

Should he raise his price? What is the maximum percentage sales decrease that he

would accept to maintain his total contribution?

The owner of a car wash wants to increase his Revenue. He

decides to reduce his price by $2.00. Currently he charges

$10.99 for the Deluxe Car wash. In a typical week he sells 70

deluxe car washes. He knows from previous experience his

sales will increase to 110 deluxe car washes per week. The

other variable costs per car wash are $1.99 which includes all

chemicals and labour costs.

Calculate the Elasticity of demand for his deluxe car wash service.

he owner of a car wash wants to increase his Revenue. He

decides to reduce his price by $2.00. Currently he charges

$10.99 for the Deluxe Car wash. In a typical week he sells 70

deluxe car washes. He knows from previous experience his

sales will increase to 110 deluxe car washes per week. The

other variable costs per car wash are $1.99 which includes all

chemicals and labour costs.

What percentage must his sales increase by to maintain his current Contribution ?

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