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It Is a Conventional Practice Among Apparel Retailers to Set

Question 64

Essay

It is a conventional practice among apparel retailers to set the retail price of clothing at twice the cost paid to the manufacturer.For example,if the retailer pays $7 for a pair of jeans,the jeans will retail for $14.What must the price elasticity of demand be for this practice to be profit maximizing?

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Since price is twice marginal ...

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