XYZ, inc. makes and sells bicycle parts. Last year XYZ sold 5,400 handlebars, generating sales of $110,000. This year they are considering a new pricing strategy with a target profit goal of $15,000. They determined that for every $2 increase to the selling price, a 300 decrease in unit sales was expected. Their total costs were $110,000 with fixed costs accounting for $60,000. This year, XYZ, inc. is considering changing the selling price to $27. Assuming that the demand function is linear, what is the slope of demand? CALCULATED VARIABLES: cm = $11.11 vc = $9.26 asp = $20.37
XYZ, inc. makes and sells bicycle parts. Last year XYZ sold 5,400 handlebars, generating sales of $110,000. This year they are considering a new pricing strategy with a target profit goal of $15,000. They determined that for every $2 increase to the selling price, a 300 decrease in unit sales was expected. Their total costs were $110,000 with fixed costs accounting for $60,000. This year, XYZ, inc. is considering changing the selling price to $27. Assuming that the demand function is linear, what is the slope of demand? CALCULATED VARIABLES: cm = $11.11 vc = $9.26 asp = $20.37
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter11: Price And Output Determination: Monopoly And Dominant Firms
Section: Chapter Questions
Problem 8E
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XYZ, inc. makes and sells bicycle parts. Last year XYZ sold 5,400 handlebars, generating sales of $110,000. This year they are considering a new pricing strategy with a target profit goal of $15,000. They determined that for every $2 increase to the selling price, a 300 decrease in unit sales was expected. Their total costs were $110,000 with fixed costs accounting for $60,000. This year, XYZ, inc. is considering changing the selling price to $27.
Assuming that the
CALCULATED VARIABLES:
cm = $11.11
vc = $9.26
asp = $20.37
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