Answered: samsung reported a staggering 20…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter7: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 5CQ: Estimates presented in Exhibit 5 show that Android users have a higher price elasticity of demand...

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samsung reported a staggering 20 percent drop in sales of it's flagship smartphone,the Galaxy S5, for the last three months. Profits declined even more - a 49 percent collapse from last year. The reason for this collapse: Apple's introduction of it's large- screen Iphone 6 and price cuts on the IPhone 5. Apple dropped the price of the 16GB IPhone 5s from $199 to $99 and the 8GB IPhone 5s from $99 to a cool $0, with contract.

By changing the denominator in each case, compute the percentage change in the 16GB IPhone 5s price, as computed from

(a) The initial price

(b) The final price

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