The Uli Stove Company is developing a “professional-model” stove aimed at the home market. The company...

The Uli Stove Company is developing a “professional-model” stove aimed at the home market. The company estimates that variable costs will be $2,670 per unit and fixed costs will be $12,000,000 per year.

Suppose the company wants to set its price equal to full cost plus 20 percent. To determine cost, the company must estimate the number of units it will produce and sell in a year. Suppose the company estimates that it can sell 6,000 units. What price will the company set?

Price

$_________________

Suppose the company sets a price as in part a, but the number of units demanded at that price turns out to be 5,000. Revise the price in light of demand for 5,000 units.

Revised price

$____________________enter the revised price in dollars

What will happen to the number of units that will be sold if the price is raised to the one you calculated in part c?

The number of units sold will (Increase/Decrease/Remain the Same)_______ after the increase in the price.

Can you please show your work step by step?

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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