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Plan It Right, Inc., provides party planning and catering services for elegant residential parties in the Louisville area. The company recently raised its service price from $900 to $1,100 per party. As a result, sales fell to 350 from 450 units in the year earlier period.
A. Calculate the arc price elasticity of demand for PIR 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 $220 per unit for labor and materials, calculate PIR's optimal markup on price and its optimal price.
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