# Revenue maximizing

Suppose your elasticity of demand for your parking lot spaces is -.05, and price is $20/day. If your MC is zero, and your capacity at 9 a.m. is 96% full over the last month, are you optimizing? Please explain.

© BrainMass Inc. brainmass.com October 9, 2019, 10:42 pm ad1c9bdddfhttps://brainmass.com/economics/demand-supply/revenue-maximizing-229219

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Solution

Given that marginal cost is equal to zero. It implies that there are no variable costs involved. Firm can maximize its profit by maximizing its revenue.

Price elasticity of -0.05 indicates that demand is relatively inelastic at current level. Which means the % change ...

#### Solution Summary

Solution explains about revenue maximization from parking lot with the help of elasticity concept.

$2.19