Pricing

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May 18, 2017 at 12:30 am #386772
khuramch
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Sir i have a problem with BPP Kit mcq
Q;A company is selling a product at a price of $120/U.At this price it sell 200000 units per period.IT has been estimated that for every $5 increase/reduce in price,sales demand will fall/increase by 10000 units
I am able to find “a=220” and “b=.0005″
But in your lectures you said MC is given in question as variable cost..But not in this Question
So how we find ”’Selling price for maximised total sale revenue”??
Many thanks
May 18, 2017 at 6:59 am #386785
John Moffat
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Maximum sales revenue occurs when the marginal revenue (using the formula) is equal to zero.
(It is when we are at the top of the revenue curve, so the extra/marginal revenue is neither increasing nor decreasing)
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