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Elasticity

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Question 10

A Swedish manufacturer of high-end commercial heat pumps sets its prices in Swedish Krona (SEK) and sells 120 heat pumps per year in the United Kingdom when the price is 600,000 SEK per unit and the exchange rate is 1 SEK = £0.08. The price elasticity of demand (PED) for these heat pumps in the UK is unitary.

Assuming an unchanged SEK price, what is the maximum number of heat pumps it can sell per year if the exchange rate changes to 1 SEK = £0.06?

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200

Elasticity Questions

  1. A Level
  2. /Economics
  3. /Elasticity