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Vision (PM 12/06, amended)

Aaccastudf510y ago
Hi, I am struggling to understand how BPP authors have calculated the profit for Birdcam-V. The text is: “The marketing director has estimated that at a selling price of $600 per unit, a total of 85,000 units p.a. would be sold during y/e 30 Nov 20×7 and that each increase/decrease in the selling price of $10 will cause quantity demanded to decrease/increase by 1,000 units. The variable cost per unit is expected to remain constant at $180. […] The directors have agreed to adopt the combination of selling price and output that will maximize profit earned from sales of the Birdcam-V.” I understand Step 1 where they use demand equation to calculate the price at which demand is zero. P=a-bx => 600=10/1,000*85,000 => a = 1450 Step 2 is substitute a into P=a-bx => P=1450-0.01x However I don’t understand the following steps. At Step 3 they derive marginal revenue as MR=1450-0.02x. Where is this 0.02 coming from? Thank you for your help! Irina
kengarrettkengarrettTutor10y ago#1
I've answered this on your earlier post. Please don't post the same query again so soon. We are not your slaves.
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