1. IBM would like to sell 5% of its products in 2022 more than the year before; its price elasticity of demand is -1.25 and that its average per unit currently is $350. In order for IBM to be able to realize its sales objective (5%).
a. By what percentage should the company lower its price level (your final answer must be shown in percentage)?
b. And what should the price per unit be your final answer must be shown in dollar value)?
2. SMC currently has a student enrollment of 32,500 and its price elasticity of demand is -0.75. Due to the anticipation of rising inflation, school administrators decided
to raise tuition across the board by 12.5%,
a. By what percentage would the impact of 12.5% increase in tuition be on student enrollment in upcoming academic year (your final answer must be shown in
percentage)?
b. And what is the anticipated student enrollment going to be in upcoming academic year (your final answer must be shown in numerical value and it is ok to be in
decimal point).