You Own a Small Bookstore

question 8

Multiple Choice

You own a small bookstore. You have hired a marketing firm to calculate your own price elasticity of demand and your advertising elasticity of demand. The firm has provided you with the relevant numbers regardless of minor adjustments in price or advertising budget. Your own price elasticity of demand is around -1.7, and your advertising elasticity of demand is around 0.05. How much should you mark-up your price over your marginal cost for your books?

• A)By approximately a factor of 0.41.
• B)By approximately a factor of 2.43.
• C)By approximately a factor of 37 percent.
• D)By approximately a factor of 70 percent.

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