Practice Calculations to Compute the Essay

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3) to determine if the firm should increase market share by lowering the price, total revenue must be considered. At $5.00, the firm sells 17650 units for total revenue of $88,250. At $4.99, the firm sells 17,692 units for a total profit of $88,283.08. Thus, the firm gains addition revenue by lowering its price to sell more units, at least to a point. At some point, lowering the price will result in a decrease in total revenue.

4) to calculate the portion of sales that is reliant on the independent variables, set the variables to zero. The sales remaining will be the portion that is not dependent on these variables. The base market is negative in total, so these variables determine all of the sales. To determine how much each individual variable contributes, they can be set to zero one at a time. Thus, there are 38,650 potential sales available if the price is zero. If the competitor's price is zero, the company will still receive 5650 sales in theory.

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These 5650 sales are not price dependent. So 14.6% of the total market is not price dependent.

If the income in the area is zero, there will not be any sales. If no advertising is conducted, sales will be 15,650, which means that 2000 units are dependent on the current level of advertising. If no microwaves are sold, sales will be at 16,400, which means that only 1250 units are dependent on the microwaves sold in the area.

P. 175 Question 7.

a) First plug the values into the formula. This can be done on Excel. On paper, it would be: Q = 10,000 + (60*160) -- (100*40) + (50*35) = 10,000 +….....

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