Question
The demand function for a new product has been estimated concluding that it can be formulated as: Q=135+900P The production costs per unit reach the
The demand function for a new product has been estimated concluding that it can be formulated as: Q=135+900P The production costs per unit reach the amount of 25 Euros and overhead costs 100. Using the above information: a) Calculate the price that maximizes the profit b) Calculate the price that provide a 30% return on investment (1,000 euros) c) Provide the floor or minimum price. d) Regarding your results if you would have to negotiate the margin that an intermediary has to set, what would you finally decide? The options are: set the margin at 20% on the selling price or at 10% on the buying price
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