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Markup on Cost

Brake-Checkup, Inc., offers automobile brake analysis and repair at a num- ber of outlets in the Philadelphia area. The company recently initiated a policy of matching the lowest advertised competitor price. As a result, Brake-Checkup has been forced to reduce the average price for brake jobs by 3%, but it has enjoyed a 15% increase in customer traffic. Meanwhile, marginal costs have held steady at $120 per brake job.

A. Calculate the point price elasticity of demand for brake jobs.

B. Calculate Brake-Checkup's optimal price and markup on cost.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91642407

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