Markup on Price

question 38

Essay

Markup on Price. TLC Tree Service, Inc., provides tree spraying services to residential customers in the Detroit area. The company recently raised its service price from $50 to $60 per tree. As a result, sales fell to 3,900 from 4,900 units in the prior year.
A. Calculate the arc price elasticity of demand for TLC service.
B. Assume that the arc price elasticity (from Part A) is the best available estimate of the point price elasticity of demand. If marginal cost is $12 per unit for labor and materials, calculate TLC's optimal markup on price and its optimal price.

---

Definitions:

Vertical Loading

Increasing an employee's responsibilities and control over their work, often to enhance motivation and job satisfaction.

Job Depth

The degree of control, autonomy, and discretion an employee has over their work and decision-making processes.

Integrated Model

A comprehensive approach that combines various theories or components into a unified framework for analysis or implementation.

Work Motivation

The set of internal and external forces that influence an individual's level of interest and commitment to perform their job effectively.