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Q#2 . You are asked to calculate the AVC for both Sony and Microsoft when they both charge $399, Sony charges $399 and Microsoft reduces
Q#2 . You are asked to calculate the AVC for bothSonyandMicrosoftwhen they both charge $399, Sony charges $399 and Microsoft reduces to $299, when Microsoft charges $399 and Sony reduces its price to $299, or when both Microsoft and Sony reduce price to $299 based on Exhibits 2 &3. Why do we do this? To determine the per contribution margin (per unit profit) =Price-AVC )and total contribution margin(Total profit) = (Price-AVC)Q.
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