Landscapes, Inc. is a leading distributor of potted plants and their maintenance

Question

Landscapes, Inc. is a leading distributor of potted plants and their maintenance for business environments. Demand for Interior's services is tied to the overall pace of business activity and, therefore, is sensitive to changes in national income. The greenery service sector is highly competitive, so Interior's demand is also very price-sensitive. During the past year, Interior's sold 10,500 potted plants at an average wholesale price of $25 per plant. This year, per capita income is expected to fall from $34,200 to $30,600 as the nation enters a steep recession. Without any price change, Interior's expects current-year sales to fall to 7,500 potted plants.

A) Calculate the arc income elasticity of demand.

B) Given a price elasticity coefficient on -1.5, and the projected fall in sales to 7,500 to what level should price be set to restore sales to the level of 10,500 potted plants?

Explanation / Answer

I think you reuploaded this question. however i have solved all of your ECO questions.

detailed_solution_chegg.zip http://fileice.net/download.php?file=3mqb3

Hi I have uploaded the solution at the above link. Kindly download it from there and dont forget to rate.

cheers :)

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