1. In 2019, John Deere sold 1,500 tractors at an average price of $5,000. This produced $7,500,000 in sales and $3,487,000 in gross profits.  (10 Points)

Answer a, b and the Bonus Question below based on this data:

US Tractor Market
Change in Price		-4.50%
PERFORMANCE	Current	Analysis
Market Demand	25,000	25,000
Market Share	6%
Average Price	$5,000	$4,775
Volume Sold	1,500
SALES	$7,500,000
Unit Cost	$2,675	$2,675
Cost of Goods Sold	$4,012,500	$4,213,125
Gross Profit	$3,487,500

 

1. If John Deere lowered the price to $4,775 and sales volume increased by 5%, what would be their new sales (volume and $) and profits? 

2. Is this a good decision?

BONUS (5 points):

For this price decrease to just maintain current profits, how many units would they have to sell?