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Economics

Markup on Cost. Brake-Checkup, Inc., offers automobile brake analysis and repair at a number 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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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9203316

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