5) Double Take Beauty Double Take Beauty is a spa in Provo, UT that offers single needle tattoos done by its founder, Sadie Flores. Suppose Sadie charges about $400 per tattoo on average. The marginal cost of each tattoo is about $100. She is getting better at tattooing and the tattoos are becoming more popular with customers, so she is considering raising the price to $500 per tattoo. What percentage of customers must be retained to ensure that the price increase is profitable? Note: It's conventional when not calculating elasticities to measure percentage changes relative to their initial value (%AX = new value of X-old value of X old value of X 25% 18% 84% 66.67% 75%
5) Double Take Beauty Double Take Beauty is a spa in Provo, UT that offers single needle tattoos done by its founder, Sadie Flores. Suppose Sadie charges about $400 per tattoo on average. The marginal cost of each tattoo is about $100. She is getting better at tattooing and the tattoos are becoming more popular with customers, so she is considering raising the price to $500 per tattoo. What percentage of customers must be retained to ensure that the price increase is profitable? Note: It's conventional when not calculating elasticities to measure percentage changes relative to their initial value (%AX = new value of X-old value of X old value of X 25% 18% 84% 66.67% 75%
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 6MC
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