Dr. John Dorian, chief of staff at the Northern Medical Center, has asked you to propose an appropriate markup pricing policy for various medical procedures performed in the hospital’s emergency room. To help in this regard, you consult a trade industry publication that provides data about the price elasticity of demand for medical procedures. Unfortunately, the abrasive Dr. Dorian failed to mention whether he wanted you to calculate the optimal markup as a percentage of prices or as a percentage of cost. To be safe, calculate the optimal markup on price and optimal markup on cost for each of the followingprocedures:
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