- November 18, 2021 at 2:34 pm #640985AnonymousInactive
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In your lecture on pricing this is what you said (correct?)
Optimal selling price is at $15 where we have MR > MC and it is the demand level where we have the optimal selling price.
However if we drop the selling price more then MR < MC and our profits drop too which is not good.
We use tabular approach to find out optimal selling price which is where we have MR > MC or max profit (i.e. at $15 SP)
BUT we know that optimal selling price is actually where we have max profit (i.e. at the point when MR = MC). This can be done using formula only not using tabular approach because it will not tell where we have MR = MC.
That is the difference between Tabular approach and Formula?November 18, 2021 at 4:34 pm #641007John MoffatKeymaster
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The formula approach assumes that the price demand relationship is linear and that the selling price can end up being anything.
With the tabular approach only the selling prices given are possible, and the relationship does not have to be linear.
Which approach we use depends on what the question asks for.
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