Cadie's Candy Shop (CCS) makes a special kind of candy that has become very popular with its customers. The marginal cost of producing this candy is constant. It is equal to $3.5 per box.
a. At a markup of 80%, what price should CCS charge for its candy?
b. Assuming that price elasticity of demand for this of kind candy is – 1.5, determine if the price CCS charges for its special candy is a profit-maximizing price. If it is not, what price should it charge?