25 Jan Calculating arc elasticity of demand and optimal p
Calculating arc elasticity of demand and optimal pricePlease help with the following problem: Stinging Pesticides, Inc, provides scorpion control services, to residential and business customers in the El Paso area The company recently raised its service price from $70 to $80 per annual treatment As a result, sales fell to 37,500 from 52,500 treatments in the year earlier periodA Calculate the arc price elasticity of demand for SPI serviceB Assume that the arc price elasticity (from Part A) is the best available estimate of the point price elasticity of demand If marginal cost is $48 per unit for labor and materials, calculate SPI’s optimal markup on price and its optimal price
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