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Calculating the optimal price using the arc formula for elasticity.

If the price is $15 the company sells 27 units. If price is $12, the company sells 42 units. The company wants to earn a 20% return on sales. ATC=MC=$10. How do I determine the optimal price using the linear approximation method, cost plus pricing and mark-up pricing. How does the arc formula for elasticity factor in to these equations?

 

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9204501

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