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There’s a question from the MCQ, it goes, “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 costs are $60 000 per annum and the variable costs is $8 per unit”. Question — at what selling price per unit will the profit be maximized?
Have you watched the free lecture on pricing?
You need to calculate the demand equation first.
Then you put the values of a and b that you have calculated into the equation for the marginal revenue that is given in the formula sheet.
Then you make the marginal revenue equal to the marginal cost (of $8)This gives you the level of demand at which the profit will be maximised. You then put this in the price demand equation and you will have your answer.
I am sorry, but I cannot type out the entire lecture on pricing here!
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