Problem 1: What price-cost markup is implied by a firm' elasticity of demand equal to -3.0?
Problem 2: A "loss leader" is often defined as a product which is sold below incremental cost in order to build traffic to a store (whether physical or online). How would you reconcile the use of loss leaders with the markup rule you used in part A.?
Problem 3: How is the use of a loss leader like investing in reputation?