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Alden Manufacturing produces small kitchen appliances-blenders, hand mixers, and electric skillets-under the brand name First Generation. Alden attemp...

Question:

Alden Manufacturing produces small kitchen appliances-blenders, hand mixers, and electric skillets-under the brand name First Generation. Alden attempts to target newlyweds and first-time home buyers with this brand.

 In considering that most young households have limited financial resources, Alden has attempted to engage in target costing. \"In doing this,\" Milt Alden stated, \"we have better control over keeping price right in line with customers.\"

 Alden manufactures a three-speed blender, its top seller, and a five-speed blender. The hand mixers are manufactured in two styles-a small handheld mixer with two rotating beaters and a similar style that comes with an optional stand and attached mixing bowl. Alden\'s temperature-controlled skillets are manufactured in one style with three color options.

 \"Our product offerings are narrower,\" Milt Alden added, \"but our line workers know each product like the back of their hands. This allows us to produce superior products while holding our prices low.\"

If Alden raises the price on the handheld mixer by 2 percent and quantity demanded falls by 10 percent, what is the price elasticity of demand?                                                    

a.            -5

b.            -8

c.             -12

d.            5

e.            12

 

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