- This topic has 1 reply, 2 voices, and was last updated 1 year ago by .
- You must be logged in to reply to this topic.
PQ Awards Nominations
Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
The objective of setting an Optimum Selling Price is to earn Maximum Profit:
From the Tabular approach we charge $15 selling price because it is where we have max profit;
From the Price/Demand equation approach, we calculate Price as per demand level which tells us that the lower the price gets the more the demand will be. The lowest possible price is 0 and therefore that is the price at which the demand will be at maximum but it would earn no revenue at SP of zero
However, if we charge maximum possible price then it is the price at which the demand will be at minimum.
We assume that price & demand have a linear relationship. It is regard to the fact that when price increases the quantity demanded falls.
Is it all accurate?
Yes it is accurate (and it what I state in my free lectures 🙂 )