Description
- A firm is able to sell 25,000 units at $ 10 per piece. The company fixed cost is $50,000. Variable cost is $5 per unit.
They raise the price to $15 and demand drops to 15000.
a. Calculate the price elasticity.
b. What is the new markup (profit margin %) on the sales price ($15)?
c. What is the new mark up (profit margin %) on total cost?
d. Please calculate the total profit for this company as well as the profit per each toy sold.
e. Are they better off raising the price?
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•
A firm is able to sell 25,000 units at $ 10 per piece. The company fixed cost is $50,000.
Variable cost is $5 per unit.
They raise the price to $15 and demand drops to 8,000.
i. Calculate the price elasticity.
Elasticity = % change in Dem...
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