The following information relates to questions (i) and (ii):

In the following price, revenue and cost functions, which have been established by an organization for one of its products, Q represents the number of units produced and sold per week:

Price (£ per unit) = 50 — 0.025Q Marginal revenue (£ per unit) = 50 — 0.05Q Total weekly cost = 1000 + 15Q

(a) What price per unit should be set in order to maximize weekly profit?

(i) £15.00

(ii) £17.50

(ii) £25.00

(iv) £32.50

(b) What would the weekly total contribution be if the price of the product was set at £20 per unit?

(i) £2000

(ii) £38000

(iii) £5000

(iv) £6000 a

(2 marks)

ACCA - Financial Information for Management