A retailer is currently charging a price of $147.52 for a Hewlett-Packard OfficeJet printer that costs him
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A retailer is currently charging a price of $147.52 for a Hewlett-Packard OfficeJet printer that costs him $112.00 per unit. He determines that the point price elasticity of this model of printer is 5.1 at its current price.
a. If he wants to maximize net contribution, is he better off raising his price, lowering his price, or keeping it the same?
b. If the elasticity of 5.1 is valid over a range of at least $20.00 on either side of his current price, what is his optimal (contribution-maximizing) price?
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