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At a selling price of $200, the demand will be 100 000 units per annum. The demand will change by 10 000units per annum for every $30 change in the selling price. The fixed costs are $60 000 per annum, and the variable costs $8 per unit.
At what selling price per unit will the profit be maximizedFirst you need to calculate the price demand equation, which is P = 500 – 0.003Q
Then you put the values of a and b into the marginal revenue equation on the formula sheet. So MR = 500 – 0.006Q
Then you make the MR equal to the marginal cost of 8.
So 500 – 0.006Q = 8
So Q = 82,000
Then you put Q = 82,000 in the price demand equation, so P = $254.(I go through the same question in the free lecture on pricing)
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