According to an article in the Wall Street Journal, “Lululemon Athletica Inc. became a multibillion-dollar brand by convincing women to pay $100 for yoga pants. Though the market is now flooded with cheaper alternatives, the apparel maker’s new CEO says it has no plans to lower its prices.”
a. Does Lululemon’s CEO believe that the demand for the firm’s yoga pants is price elastic or price inelastic?
b. What does the CEO expect will happen to Lululemon’s revenue if the firm cuts the price of its yoga pants?
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