Suppose a producer can manufacture her smartphones at a constant marginal cost of $300. She practices a rule-of-thumb for pricing with an “incremental margin percentage” of 70%. i) Find the price she should charge for her smartphones. ii) Using the result in (i), find the implied demand elasticity for her smartphones.

Suppose a producer can manufacture her smartphones at a constant marginal cost of $300. She practices a rule-of-thumb for pricing with an “incremental margin percentage” of 70%. i) Find the price she should charge for her smartphones. ii) Using the result in (i), find the implied demand elasticity for her smartphones.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 1E

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