When Apple introduced its first iPhone, it had few competitors and so it set a price of $500 when its unit cost was $350. The economics consulting firm it hired to estimate the demand elasticity confirmed this was the optimal price. Since then, entry into the mobile market has occurred that makes customers more price-conscious. When it brought the economics consulting firm back to estimate the demand price elasticity, it found that demand had become more price elastic at -4. Also, Apple has lowered its unit cost to $300 by finding cheaper labor.

a. What price should Apple charge now?

b. Are there any other elasticities Apple should consider as it sets a new price