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    Revenue maximizing

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    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.

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    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.