Question #145396

The manager of a sporting goods store uses cost-plus pricing to determine the profit-maximizing price of bicycles. The cost of a bicycle to the store is $80. The manager estimates that the price elasticity of demand is –3.0. What is the profit-maximizing price?

Expert's answer

firm is profit maximizing, then we know that MR=MC

"MR=P(1+\\frac{1}{\\epsilon})"

МС=МК=80

"80=P(1+\\frac{1}{-3})"

P=120

Learn more about our help with Assignments: Finance

## Comments

Dusabe Marie Solange10.03.23, 10:55Thanks for your support in our studying life

## Leave a comment