Question: 3.6 EXERCISES 1. Consider a seller seeking to maximize contribution. Under what relative values of his current price p, his cost c, and his point

3.6 EXERCISES 1. Consider a seller seeking to maximize contribution. Under what relative values of his current price p, his cost c, and his point elasticity e (p) should the seller raise his price to increase contribution? Under what conditions should he lower his price? Keep his price the same? 2. A retailer is currently charging a price of $147.52 for a Hewlett-Packard OfficeJet printer that costs him $112.00 per unit. He determines that the point price elasticity of this model of printer is 5.1 at its current price. a. If he wants to maximize net contribution, is he better off raising his price, lowering his price, or keeping it the same? b. If the elasticity of 5.1 is valid over at least a range of $20.00 on either side of his current price, what is his optimal (contribution-maximizing) price?

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