Pillar Co makes decorative candles which are made from a special organic blend of beeswax, botanical wax and scented oils. Currently Pillar Co only sells its candles in its domestic market The company has collected the data relating to sales of its 90 gram Honey Bee candle, which is very popular in Pillar Co's home country of Zedland. This pricing analysis is as follows: Price per unit (5) Variable cost per unit Quantity sold ('000 units) Fixed cost per unit (S) 4.00 4.17 5 ($) 2.00 2.00 100 96 92 2.00 4.35 88 2.00 4.55 84 2.00 4.76 10 80 2.00 5.00 Pillar Co is reviewing its pricing strategies and has decided to use the information relating to the Honey Bee candle to assess some of the company's possible pricing decisions. 6 7 8 9 Close Al P Elag for Review Pillar Co has developed a new product called the Bluebell candle, which has a variable cost of $3.00 per unit. If the company spends $20,000 on an advertising campaign its marketing director believes that the demand curve for the Bluebell candle would be P42-0.300 (where P price in S and Q demand in thousands of units after the advertising expenditure). If Pillar Co decides to launch the advertising campaign, what price should be charged for the Bluebell candle in order to maximise profits (to two decimal places)? $
Pillar Co makes decorative candles which are made from a special organic blend of beeswax, botanical wax and scented oils. Currently Pillar Co only sells its candles in its domestic market The company has collected the data relating to sales of its 90 gram Honey Bee candle, which is very popular in Pillar Co's home country of Zedland. This pricing analysis is as follows: Price per unit (5) Variable cost per unit Quantity sold ('000 units) Fixed cost per unit (S) 4.00 4.17 5 ($) 2.00 2.00 100 96 92 2.00 4.35 88 2.00 4.55 84 2.00 4.76 10 80 2.00 5.00 Pillar Co is reviewing its pricing strategies and has decided to use the information relating to the Honey Bee candle to assess some of the company's possible pricing decisions. 6 7 8 9 Close Al P Elag for Review Pillar Co has developed a new product called the Bluebell candle, which has a variable cost of $3.00 per unit. If the company spends $20,000 on an advertising campaign its marketing director believes that the demand curve for the Bluebell candle would be P42-0.300 (where P price in S and Q demand in thousands of units after the advertising expenditure). If Pillar Co decides to launch the advertising campaign, what price should be charged for the Bluebell candle in order to maximise profits (to two decimal places)? $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Pillar Co makes decorative candles which are made from a special organic blend of
beeswax, botanical wax and scented oils. Currently Pillar Co only sells its candles in
its domestic market.
The company has collected the data relating to sales of its 90 gram Honey Bee
candle, which is very popular in Pillar Co's home country of Zedland. This pricing
analysis is as follows:
Price per unit
($)
Quantity sold
('000 units)
100
Variable cost per unit Fixed cost per unit
($)
($)
2.00
4.00
2.00
5
96
4.17
92
2.00
4.35
2.00
4.55
84
2.00
4.76
10
80
2.00
5.00
Pillar Co is reviewing its pricing strategies and has decided to use the information
relating to the Honey Bee candle to assess some of the company's possible pricing
decisions.
6
7
8
9
88
25 of 34
Close All P Flag for Review
Pillar Co has developed a new product called the Bluebell candle, which has a variable cost of $3.00 per
unit. If the company spends $20,000 on an advertising campaign its marketing director believes
that the demand curve for the Bluebell candle would be P = 42 -0.30Q (where P = price in S and Q =
demand in thousands of units after the advertising expenditure).
If Pillar Co decides to launch the advertising campaign, what price should be charged for the
Bluebell candle in order to maximise profits (to two decimal places)?
$
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education