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Hi Sir,
I was taking this revision mock F5 exam and was not able to get answer for this. Can you please help me how to do this?
At a selling price of $200, the demand will be 100,000 units per annum. The demand will change by 10,000 units for every $30 change in the selling price. The fixed cost are $60,000 per annum, and the variable costs $8 per unit.
At what selling price per unit will the profit be maximised?P=a-bQ
b=change in price/change in demand therefore $30/10000 units
$200=a-$30/10000×100000 units
a=$500
P=500-0.003Q
a=price when Q=0
MR=a-2bQ
$8(variable cost per unit)=$500-(0.003)x2Q
$500-$8/0.006=Q=82000 units
P=a-bQ
P=$500-0.003×82000 units
P=$500-246=$254
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