Sam is developing a business plan for starting Pizza business in Waltham. Sam specializes in pepperoni pizza. Based on the secondary data he has found out that there are 20,000 families in the area and about 20% of these families are strict vegetarians. He believes that he can get 10% of the market share of the potential customers. His research reveals an average family consumes 10 pizzas per year.

It costs a total of $6 to make one Pepperoni pizza which includes $ 5 Sam pays for pizza dough to make one pizza. Sam is planning to introduce his Pepperoni pizza at $8 and raise the price by $2 in the second year. Price elasticity of demand for pizza is 0.50

d. Calculate the % mark up on sales price and total cost in the second year.