If the price elasticity is -3 and RM 100 is the marginal cost of product X, what should be the optimal sale price?Hint: apply the mark-up rule
Here,
"MC=100\\\\Elasticity=-3"
The mark up rule of pricing states that,
"mark\\space up ={(P\u2212MC)\\over P}={1\\over Elasticity}"
"{(P-100)\\over P}=-{1\\over3}"
"-P=3P-300"
"-4P=-300"
"P=75.5\\approx76"
Therefore the Optimal Sale Price is RM 76.
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