M61110 1 To: Pricing Manager, Region 1 From: Regional Manager, Region 1 Cable System Re: Prots from STARZ We recently added the STARE. Network to our premium cable tier. |Currently, 352 of our basic service subscribers purchase this service at our current price of $10.50 per month. As you know, our current contributions from STARZ are not as high as we expected. I would like you to evaluate our current price to see if we might be able to raise or lower it to enhance the contributions of STAREr to our revenues and ultimately prots. Hint: Estimate the demand curve from the attached price and quantity data to get the slope and nd the price elasticity of demand for the current price and quantity, and tell me, using the optimal pricing formula (actual markup versus optimal markup}, if we should increase or decrease prices