COST PLUS PRICING. (This question plus the next 3 questions)

You have demand for 2 products:

Q_A = 150 1.5*P_A

And

Q_B = 200 2*P_B

You anticipate selling 60 units of each product.

You have to mark-up your two products to cover an unexpected increase in overhead costs.

Based on the cost-plus pricing procedure we did in class, answer this question plus the next three questions.

Which comes closest to the price elasticity for Product A?

Multiple Choice

-1.80

-1.50

-1.25

-0.80

COST PLUS PRICING. (This question plus the next 2 questions)

You have demand for 2 products:

Q_A = 150 1.5*P_A

And

Q_B = 200 2*P_B

You anticipate selling 60 units of each product.

You have to mark-up your two products to cover an unexpected increase in overhead costs.

Based on the cost-plus pricing procedure we did in class, answer this question plus the next question.

Which comes closest to the price elasticity for Product B?

Multiple Choice

-1.50

-1.80

-2.00

-2.30

COST PLUS PRICING. (This question plus the next question)

You have demand for 2 products:

Q_A = 150 1.5*P_A

And

Q_B = 200 2*P_B

You anticipate selling 60 units of each product.

You have to mark-up your two products to cover an unexpected increase in overhead costs.

Based on the cost-plus pricing procedure we did in class, answer this question plus the next question.

Which comes closest to the percentage value of the mark-up you will put on Product A? Be careful; I am NOT asking you the value of "1 Plus the Mark Up", I am asking you the value of the mark up.

Multiple Choice

80%

100%

150%

200%