The postal service of St. Vincent, an island in the West Indies, obtains a significant portion of its revenues from sales of special souvenir sheets to stamp collectors. The souvenir sheets usually contain several high-value St. Vincent stamps depicting a common theme, such as the life of Princess Diana. The souvenir sheets are designed and printed for the postal service by Imperial Printing, a stamp agency service company in the United Kingdom. The souvenir sheets cost the postal service $0.85 each. St. Vincent has been selling these souvenir sheets for $10.00 each and ordinarily sells about 55,000 units. To test the market, the postal service recently priced a new souvenir sheet at $11.00 and sales dropped to 45,000 units.

Required:

1a. Calculate the contribution margin for sale price of $10.00 each or $11.00 each?

	$10.00 Price	$11.00 Price
Unit sales
Sales
Cost of Good Sold
Contribution Margin

1b.Does the postal service of St. Vincent make more money selling souvenir sheets for $10.00 each or $11.00 each?

	$10.00
	$11.00

2. Estimate the price elasticity of demand for the souvenir sheets. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 4 decimal places.)

Price elasticity of demand

3. Estimate the profit-maximizing price for souvenir sheets. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Profit- Maximizing price