If the price elasticity of demand for a product is 2. 5, then a price cut from $2. 00 to $1. 60 will:_______
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<u>Solution and Explanation:</u>
Particulars 2018 2017 2016
Revenues (a) 36,397 34,350 32,376
Cost of sales (b) 20,441 19,038 17,045
Gross profit (c) = (a) - (b) 15,956 15,312 14,971
Gross margin ration
43.8% 44.6% 46.2%
Monetary 2018 Compared to Fiscal 2017
For monetary 2018, our merged gross edge was 80 premise focuses lower than financial 2017, essentially mirroring the accompanying components:
• Unfavorable changes in net outside cash trade rates, including supports (diminishing gross edge roughly 90 premise focuses);
• Lower NIKE Direct edge (diminishing gross edge roughly 10 premise focuses) reflecting higher blend of off-value deals in the principal half of financial 2018, which was in part balanced by edge extension in the second 50% of monetary 2018;
• NIKE Brand the maximum ASP, net of limits, on a discount proportionate premise, which was level for financial 2018 as higher limits in the principal half of monetary 2018 were counterbalanced by higher the maximum ASP in the second 50% of the year; and
• NIKE Brand item costs, on a discount equal premise, which were level.
<u>Financial 2017 Compared to Fiscal 2016 </u>
For financial 2017, our merged gross edge was 160 premise focuses lower than monetary 2016, basically determined by the accompanying elements:
• Higher NIKE Brand the maximum ASP, net of limits, on a discount comparable premise (expanding gross edge around 70 premise focuses) lined up with our methodology to convey creative, premium items to the purchaser;
• Higher NIKE Brand item costs (diminishing gross edge roughly 100 premise focuses) as an expansion in the blend of greater expense items and work input cost swelling more than balance lower material information costs;
• Unfavorable changes in net remote money trade rates, including fences (diminishing gross edge around 90 premise focuses); and
• Lower NIKE Direct edges (diminishing gross edge roughly 20 premise focuses) mirroring the effect of higher off-value deals.