5. Exercise 11.6 Wyandotte Chemical Company sells various chemicals to the automobile industry. Wyandotte currently sells 30,000 gallons of polyol per year at an average price of $60 per gallon. Fixed costs of manufacturing polyol are $360,000 per year and total variable costs equal $720,000. The operations research department has estimated that a 15 percent increase in output would not affect fixed costs but would reduce average variable costs by 60 cents per gallon. The marketing department has estimated the arc elasticity of demand for polyol to be -2.0. How much would Wyandotte have to reduce the price of polyol to achieve a 15 percent increase in the quantity sold? 7.5 percent Such a price cut would increase total revenues from $1,800,000 to $ Total costs would be $ and total profits would be s

5. Exercise 11.6 Wyandotte Chemical Company sells various chemicals to the automobile industry. Wyandotte currently sells 30,000 gallons of polyol per year at an average price of $60 per gallon. Fixed costs of manufacturing polyol are $360,000 per year and total variable costs equal $720,000. The operations research department has estimated that a 15 percent increase in output would not affect fixed costs but would reduce average variable costs by 60 cents per gallon. The marketing department has estimated the arc elasticity of demand for polyol to be -2.0. How much would Wyandotte have to reduce the price of polyol to achieve a 15 percent increase in the quantity sold? 7.5 percent Such a price cut would increase total revenues from $1,800,000 to $ Total costs would be $ and total profits would be s

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Description: 5. Exercise 11.6Wyandotte Chemical Company sells various chemicals to the automobile industry. Wyandotte currently sells 30,000 gallons of polyol per year at anaverage price of $60 per gallon. Fixed costs of manufacturing polyol are $360,000 per yea

MATLAB: An Introduction with Applications

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ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

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5. Exercise 11.6
Wyandotte Chemical Company sells various chemicals to the automobile industry. Wyandotte currently sells 30,000 gallons of polyol per year at an
average price of $60 per gallon. Fixed costs of manufacturing polyol are $360,000 per year and total variable costs equal $720,000. The operations
research department has estimated that a 15 percent increase in output would not affect fixed costs but would reduce average variable costs by 60
cents per gallon. The marketing department has estimated the arc elasticity of demand for polyol to be -2.0.
How much would Wyandotte have to reduce the price of polyol to achieve a 15 percent increase in the quantity sold?
7.5 percent
Such a price cut would increase
total revenues from $1,800,000 to $
Total costs would be $
and total profits
would be s

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