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Assume a firm sells 1M units of its product for $10 and has a 30% gross...

Assume a firm sells 1M units of its product for $10 and has a 30% gross profit margin ($3). Cutting the price to $9.50 might stimulate unit sales by 10%. Will the assumed increase in sales volume offset the decrease in the margin? I know the answer is false but I'm confused as to how. is the new gross profit margin from the cut-price 2.5 or 2.85?

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jeff jeffy answered 1 year ago
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