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Price and Sales Management

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You have taken over management of a small concession stand on a local beach for the summer. Your main product is iced water, popular on hot days. You've been selling 400 cups per day at 50 cents each. The cups cost 5 cents each. One of your customers suggests that you cut the price to 40 cents and you'll make more money. For the customer to be correct, how much must your sales increase?

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Solution Summary

Price and sales management case is assessed.

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For the current price level,
Total Cost = $0.05*400 = $20
Total Revenue = $0.5*400 = $200
Total Profit = Total Revenue - Total Cost = $180

At the ...

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