Smith's Electronics Originally Priced a Private-Label Portable DVD Player at $90

Smith's Electronics originally priced a private-label portable DVD player at $90, and then sold 1,500 units per week. After raising the price to $100, sales dropped to 1,000 units per week. First, determine the price elasticity, and then determine the profit-maximizing price if the private-label portable DVD player costs $50.

A) $90
B) $85.70
C) $75
D) $70.25
E) $70

Correct Answer:

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