Estimating the optimal markup on price

Reference no: EM13967449

Optimal Markup on Price

TLC Lawncare, Inc., provides fertilizer and weed control lawn services to residential customers. Its seasonal service package, regularly priced at $250, includes several chemical spray treatments. As part of an effort to expand its customer base, TLC offered $50 off its regular price to customers in the Dallas area. Response was enthusiastic, with sales rising to 5,750 units (packages) from the 3,250 units sold in the same period last year.

A. Calculate the arc price elasticity of demand for TLC service.

B. 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 $135 per unit for labor and materials, calculate TLC's optimal markup on price and its optimal price.

Reference no: EM13967449

Questions Cloud

Discuss & interpret the financials in relation to initiative : Write a 350 - 700 word analysis of the company's short term and long term financing needs and determine strategies for the company to manage working capital.

Define the term value-added analysis : Define the term "value-added analysis." Provide a brief explanation about how the concept of "value-added analysis" entered into the industry, including the person who authored the concept and the premise for introducing the concept in the industr..

Estimating the optimal markup : Dr. Robert Romano, chief of staff at County General Hospital, has asked you to propose an appropriate markup pricing policy for various medical procedures per- formed in the hospital's emergency room.

Question regarding the markup calculation : Controller Dana Scully has asked you to review the pricing practices of Fox Mulder, Inc., an importer and regional distributor of low-priced cosmetics products (e.g., The Black Oil). Use the following data to calculate the relevant markup on cost ..

Estimating the optimal markup on price : TLC Lawncare, Inc., provides fertilizer and weed control lawn services to residential customers. Its seasonal service package, regularly priced at $250, includes several chemical spray treatments. As part of an effort to expand its customer base, ..

Financial career options that an individual with a finance : Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page is not included in the required page length

Sketchy information on firm pricing practices : Constanza has asked you to complete an analysis of profit margins earned on a number of recent projects. Unfortunately, your predecessor on this project was abruptly transferred, leaving you with only sketchy information on the firm's pricing prac..

Examine the main structural and process changes : Review the Case Study: Implementing Culture Change in Food Service. Next, examine the main structural and process changes that will be required to design and implement family-style dining at this facility.

What is pconv at rated conditions : A 100-hp 440-V 0.8-PF-leading Δ-connected synchronous motor has an armature resistance of 0.22Ω and a synchronous reactance of 3.0Ω. Its efficiency at full load is 89 percent. What is the input power to the motor at rated conditions?

User Account

All Pages