• A firm is able to sell 25,000 units at $ 10 per piece. The company fixed cost is $50,000. Variable cost is $5 per unit.

They raise the price to $15 and demand drops to 15000.

a. Calculate the price elasticity.

b. What is the new markup (profit margin %) on the sales price ($15)?

c. What is the new mark up (profit margin %) on total cost?

d. Please calculate the total profit for this company as well as the profit per each toy sold.

e. Are they better off raising the price?