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Carmel says

Hi John,

Example 4, page 28. I’m not quite sure how you got 18.4 by adding 6.4 to both sides of the equation. Can you clarify please?

Thanks

Carmel

John Moffat says

They sell 16,000 units at a price of $12.

The maximum price (a) is the price at which the demand is zero – i.e. demand lower by 16,000.

For every 2,500 lower demand, the price is increased by $1. So for 16,000 lower demand, we need to increase the price by 16,000/2,500 x $1 = $6.40

So maximum selling price (a) = 12 + 6.50 = $18.40

Carmel says

Of course, thanks John.

John Moffat says

You’re welcome, Carmel

vikki says

I’m stuck on example 6 chapter 7. Selling price £100 p.u demand 20,000 per annum. For every £2 change in selling price demand will change by 2000 units. On looking at the answer P=120-0.001Q I get where the 0.001 comes from but where do you get the 120 from?

Thanks

Vikki

John Moffat says

The best way to remember it is : a = current selling price + b (current demand)

vikki says

Sorry can you expand please selling price is £100 plus current demand? Isn’t that 20,000 pa because b = £2/2000.

vikki says

I’ve woken up sorry I didn’t multiply 0.001 with demand of 20000 to give 20+100=120

anam says

Hi i have a lil doubt… minus minus is plus …so how we got -2500 b …we supposed to add 16000 and 13500 and get -29500 instead

John Moffat says

Minus minus is indeed a plus.

However, we are taking minus 16,000 plus 13,500.

-16000 + 13500 = -2500

(look again – it is minus 16000!)