A gamestore is a local monopoly that sells many game products, using markup pricing. That is,...

A gamestore is a local monopoly that sells many game products, using markup pricing. That is, its price for a product is P=c(1+m), where c is how much it pays for each unit of the product from producers, and m is the markup it adds to the product when selling to consumers

Products may differ in the price elasticity of demand.

A) Under what condition will markup pricing maximize the gamestores profit?

B) If the price elasticity for a good is –6, what will be the supermarket’s optimal markup for the good?

C) the store sets m=60^ for a brand new game but m=10% for some old game. Based on this information, which of these two products has more elastic consumer demand?

Expert Solution

Rahul Sunny answered 2 years ago

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