Essay
Markup on Cost. Radon Detectives, Inc., offers radon testing to homeowners in the Bethlehem, Pennsylvania area. The company recently initiated a policy of matching the lowest advertised competitor price. As a result, Radon Detectives has been forced to reduce the average price for radon tests by 1%, but has enjoyed a 3% increase in demand. Meanwhile, marginal costs have held steady at $30 per test.
A. Calculate the point price elasticity of demand for radon tests.
B. Calculate Radon Detectives' optimal price and markup on cost.
Correct Answer:
Verified
Correct Answer:
Verified
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