What price does the company charge per racket?

The Morison Company produces tennis rackets the marginal cost of a racket being $20. Since there ar Show more The Morison Company produces tennis rackets the marginal cost of a racket being $20. Since there are many substitutes for the firms rackets the price elasticity of demand for its rackets equals about -2.0. In the relevant range of output average total cost is very close to marginal cost. a) The president of the Morison Company feels like the cost-pricing is appropriate for his firm. He remarks up average variable cost by 100% to get price. Comment on his procedure. b)What price does the company charge per racket? Because of the hightened competition the price elasticity of demand for the firms tennis rackets increases to -3.0. The president continues to use the same cost-pricing formula as before. Comment on its adequacy. Show less

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