Clarification of marginal cost

Reference no: EM1367293

Demand for DVD rentals at a video store is described by the equation: Q= 4,000-500P, where Q denotes the number of DVDs rented per week and P is the rental price in dollars.

a. Determine the point price elasticity of demand at P= $3.00

b. What would be the new point price elasticity if price were raised to P= $4.50?

c. If the profit maximizing price is $4.50, what is the marginal cost of a rental?

Reference no: EM1367293

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