posted by ryan on .
Discuss the role of costs and demand in cost-plus pricing. Suppose that through experimentation you know that if you change price by $6, the number units of the product you sell changes by 24. The current price for your product is $10. The number of units sold is 30. Your total variable costs are $150. What is your profit maximizing markup? Price?
Given the information, you have give, the price elasticity is highly elastic. This suggest you should lower the price. While you provide total variable costs, you have not provided marginal costs. So, the profit maximizing price cannot be determined.