Answer to Question #98188 in Finance for Jay

Answer to Question #98188 in Finance for Jay

Category:
Answers>Economics>Finance

Question #98188

George has been selling 5,000 T-shirts per month for $8.50. When he increased the price to $9.50, he sold only 4,000 T-shirts. What is the demand elasticity? If his marginal cost is $4 per shirt, what is his desired markup and what is his initial actual markup? Was raising the price profitable?

Expert’s answer

Calculation for demand elasticity; Demand elasticity is -2 Initial actual markup percentage calculation; %Desired markup percentage calculation; %Profit of selling 5000 T shirts on markup price; Profit of selling 4000 T shirts on markup price; Raising the price of T shirt is not profitable.

Post a Comment