Markup on Cost. Chim-Chimery, Inc., offers chimney sweepings in the Montpelier, Vermont area. The company recently initiated a policy of matching the lowest advertised competitor price. As a result, Chim-Chimery has been forced to reduce the average price for chimney cleaning by 4%, but has enjoyed an 8% increase in demand. Meanwhile, marginal costs have held steady at $25 per cleaning.
A. Calculate the point price elasticity of demand for chimney cleaning.
B. Calculate Chim-Chimery's optimal price and markup on cost.

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The Answer of Markup on Cost. Chim-Chimery, Inc., offers chimney sweepings in the Montpelier, Vermont area. The company recently initiated a policy of matching the lowest advertised competitor price. As a result, Chim-Chimery has been forced to reduce the average price for chimney cleaning by 4%, but has enjoyed an 8% increase in demand. Meanwhile, marginal costs have held steady at $25 per cleaning.
A. Calculate the point price elasticity of demand for chimney cleaning.
B. Calculate Chim-Chimery's optimal price and markup on cost.