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A firm introduced a new product to the market in the first month of the year that supported with the corresponding advertising campaign and showed their steady growth next months. The starting price was set at a level of 30% above the average cost (AM). The company's objective is to cover overhead costs and achieve maximization at profits and therefore wonders if the price of 7.5 is optimal. With continuous development of sales the company conducted market research and found that elasticity demand to price is 3. The formula for calculating the elasticity of demand is given to the value: T=[MK/(TMK)]1 Sales (tons) and costs (thousand euros) for the next 3 months are estimated as follows: a) Assuming that the price can vary, calculate the price per month. b) What markup rate is extracted for each month? c) What other factors should the business take into account besides the decisions for price and sales? A firm introduced a new product to the market in the first month of the year that supported with the corresponding advertising campaign and showed their steady growth next months. The starting price was set at a level of 30% above the average cost (AM). The company's objective is to cover overhead costs and achieve maximization at profits and therefore wonders if the price of 7.5 is optimal. With continuous development of sales the company conducted market research and found that elasticity demand to price is 3. The formula for calculating the elasticity of demand is given to the value: T=[MK/(TMK)]1 Sales (tons) and costs (thousand euros) for the next 3 months are estimated as follows: a) Assuming that the price can vary, calculate the price per month. b) What markup rate is extracted for each month? c) What other factors should the business take into account besides the decisions for price and sales

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