Markup on Cost. Oil-n-Go, Inc., offers automobile oil changes at a number of outlets in the greater Ann Arbor area. The company recently initiated a policy of matching the lowest advertised competitor price. As a result, Oil-n-Go has been forced to reduce the average price for oil changes by 5%, but has enjoyed a 15% increase in customer traffic. Meanwhile, marginal costs have held steady at $20 per oil change.
A. Calculate the point price elasticity of demand for oil changes.
B. Calculate Oil-n-Go's optimal price and markup on cost.

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The Answer of Markup on Cost. Oil-n-Go, Inc., offers automobile oil changes at a number of outlets in the greater Ann Arbor area. The company recently initiated a policy of matching the lowest advertised competitor price. As a result, Oil-n-Go has been forced to reduce the average price for oil changes by 5%, but has enjoyed a 15% increase in customer traffic. Meanwhile, marginal costs have held steady at $20 per oil change.
A. Calculate the point price elasticity of demand for oil changes.
B. Calculate Oil-n-Go's optimal price and markup on cost.