A manufacturer produces and sells two products, A and B. The unit variable cost is sh.12 and sh.8 for A and B respectively. A review of selling prices is in progress and it has been estimated that, for each product and increase in the selling price would result in a fall in demand of Sh .500 units per every Sh.1 increase in price and similarly a decrease of Sh.1 in price would result in an increase in demand of 500 units. The current sales prices and sales demand are: - Price ( Sh.) Demand (Units) A 30 15,000 B 58 21,000 Required: Calculate the profit - maximizing price for reach product.
A manufacturer produces and sells two products, A and B. The unit variable cost is sh.12 and sh.8 for A and B respectively. A review of selling prices is in progress and it has been estimated that, for each product and increase in the selling price would result in a fall in demand of Sh .500 units per every Sh.1 increase in price and similarly a decrease of Sh.1 in price would result in an increase in demand of 500 units. The current sales prices and sales demand are: - Price ( Sh.) Demand (Units) A 30 15,000 B 58 21,000 Required: Calculate the profit - maximizing price for reach product.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A manufacturer produces and sells two products, A and B. The unit variable cost is sh.12 and
sh.8 for A and B respectively. A review of selling prices is in progress and it has been estimated
that, for each product and increase in the selling price would result in a fall in demand of Sh
.500 units per every Sh.1 increase in price and similarly a decrease of Sh.1 in price would result
in an increase in demand of 500 units. The current sales prices and sales demand are: - Price (
Sh.) Demand (Units) A 30 15,000 B 58 21,000 Required: Calculate the profit - maximizing
price for reach product.
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