Answer: Option (C) is correct.
Explanation:
The percentage markup is the difference between the selling price of a commodity and the cost of producing it.
Suppose there is a product whose selling price is $150 and the cost of producing the product is $100.
Therefore, the percentage markup = [tex]\frac{150 - 100}{100} \times 100[/tex]
= 50%
So, if the demand of a product is inelastic then the firm can charge higher prices which results in higher mark up over cost. Alternatively, if if the demand of a product is elastic then the firm can charge lower prices which results in lower mark up over cost.
