Business, 25.03.2020 21:48 djdkfkfkckmfmf9919

When XYZ firm entered the market for good A two years back, it kept the price of its product low to attract customers away from its leading competitor. The firm has now established itself and has a market share of 20 percent. The management of XYZ is planning to increase price of A from the current $6 per unit to $7 per unit. Timothy Walters, the marketing head, however, feels this is not a good idea because it will reduce quantity demanded drastically from the current 1,200 units to 900 units. His colleague and the head of the sales department, Jake Mayers, feels that the quantity demanded would only decline by 250 units. According to Jake, the firm can afford to increase the price because even after the price increase they would still have significant market share. Timothy and Jake most likely agree with which of the following?

A. The demand curve for A will shift to the left after the price increase.
B. The equilibrium market price is less than S6.
C. The demand for good A is elastic
D. The market share of XYZ will increase in the near future.
E. The total revenue will increase even if the price rises by $1.

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When XYZ firm entered the market for good A two years back, it kept the price of its product low to...