Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › TR = TC (aq – bq2 = FC + vc/unit x no of units) is this equation examinable

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- May 6, 2023 at 7:58 pm #683998
is this equation examinable in the exam? this relates to pricing chapter

May 6, 2023 at 10:35 pm #684000You can be asked to

Derive and manipulate a straight line demand equation. Derive an equation for the total cost function(including volume-based discounts).

The straight line demand equation shows the relationship between price and demand.

Formula: Demand equation (P) = a – bQ

P = selling price

Q = Quantity demanded at that price

a = a theoretical maximum price at which there is no demand

b = the change in price required to change demand by 1 unit (gradient)

To calculate a:Formula: a = $(current price) + [ (current quantity at current price ÷ change in quantity when price is changed by $b) x $b]

To calculate b:

Formula: b = change in price ÷ change in quantity

May 6, 2023 at 11:05 pm #684001For example

Our product is priced at $13. At this price, we sell 75 a month. When we raised the price to $15 we sold 50. Determine the demand equation.

P = a – bQ

a = $13 + [(75/25) x $2 = $19

b = (15 – 12) ÷ (75 – 50) = 0.12* Therefore P = 19 – 0.12Q

* 12 = 19 – 0.12 Q

* 12-19 = – 0.12 Q

* Q = 58.33May 7, 2023 at 1:30 am #684003This was helpful, Thanks for answering my question

May 7, 2023 at 11:01 pm #684031Your welcome

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