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i am confused about example 6, what do we assume tht there is a increase or decrease in price and quantity ? wht will be the number of units to we assumed for variable cost?
With optimal pricing using equations we always assume that the price demand relationship is linear. Therefore if the price increases by $2 then demand will fall by 2,000 units, and if the price decreases by $2 then the demand will increase by 2,000 units.
We do not assume any units for variable cost. We calculate the optimum selling price and the demand at that price.
Have you watched the free lectures working through this lecture? It is completely pointless to use the notes without watching the lectures because they are only lecture notes and not a Study Text. It is in the lectures that I work through the examples and explain and expand on the notes. If you are not watching the lectures for any reason it is essential that you buy a Study Text from one of the ACCA Approved Publishers and study from there.
(However you choose to study, you must buy a Revision Kit from one of the ACCA Approved Publisher because it is not possible to pass the exam without practicing lots and lots of past exam and other exam standard questions after you have studied all of the topics.)
sorry i wasnt clear in my question , i meant to ask about whether in example 6 should i assume the changes as increase or decrease since it wasnt given in the question?
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