Looking for any web sites or info to help me with the following
assignment:

Marketing has submitted compelling evidence that your product or
service has a price elasticity coefficient of 2.5, and therefore
recommends that you lower prices by 10%.  Marketing bonuses are based
on sales revenues.  Your general manage has a profit target to meet. 
You will need to evaluate the price reduction strategy in light of
both marketing and general management objectives.  What cost
informatioon will you need to evaluate this proposal?

Hello Boobee,

Let me summarize your question:
  You want web sites to explain the relationship between elasticity,
sales revenue and profit.
There are a number of good explanations of this concept on the web.
These were found with a search of
  price elasticity coefficient
and
  elasticity revenue profit
I will refer to a few sites that appeared to have a good explanation
of the concepts and make a brief summary at the end.

This first site provides a series of linked pages. Starting at
  http://ingrimayne.saintjoe.edu/econ/elasticity/Elastic1.html
and selecting "next" at the end of each page, you get a good summary
(with charts and examples) that describe how to compute elasticity,
what it means to sales, and then ties it into marginal revenue
calculations to determine the point where sales can be maximized.
However, the general manager is interested in increased profit (price
- cost), so you need to take into account the total profit at each
point in addition to revenue. At the same site, starting at
  http://ingrimayne.saintjoe.edu/econ/MakeProfit/Profit.html
goes into a similar analysis for profit - taking into account the
"fixed" and "variable" costs of production.

Other references include:
  http://www.econ.ucsb.edu/~rabbit/econ100b/peterpp/newch24/
a presentation on Monopolies and how they address profit maximization
 http://www.evpillinois.org/VM22002Class/Economics%20Part%202.ppt
a Powerpoint presentation on Microeconomics that addresses the major
points
  http://home.attbi.com/~pstlarry/PandQ.ppt
"Mind your P's and Q's", a little more technical than the other
sources.

So in summary,
 - the > 1 price elasticity indicates that reduced costs will boost
sales
 - increased sales will (usually) decrease the price per unit,
offsetting the price reduction
So if the fixed cost are "large enough", the 25% increased sales would
result in increased profits for the general manager, even though the
profit per unit may be less. You would have to do the proper analysis
to determine if this was true for the specific case you may have.

If any of this is unclear, please make a clarification request so I
can expand on a portion of the answer. Good luck with your work.

  --Maniac

Thanks alot -- the sites really helped.