A firm is able to sell 20,000 units. The company fixed cost is $8,000. Variable cost is $5per unit. Contribution margin (CM) is $5

a. What is the markup (profit margin %) on sales price? What is the mark up on total cost (profit margin %)?

b. If the price elasticity of demand is 2, how many units they can sell if they drop the SP by $2.

c. What is the new markup on sales price? What is the new mark up on total cost? (Hint: use the new sales)

d. Please calculate the total profit for this company as well as the profit per each toy sold (hint: use the new demand)