Question#1:-

A football club charges $12 per ticket for home games. Average attendance at these regular games is 16,000. When
prices were increased by $1 per ticket, attendance will fall by 2,500.

Determine PED if ticket price increases from $12 to $13.

Question#2:-

ABC Limited is selling 100 units at price of $30 each. Organization decided to reduce the price to $27. If price will
decreased the demand will go to 150 units.

Required:

(a) Prepare the demand equation.

(b) Determine the optimum selling price if organization wishes to sell 190 units.

Question#3:-

Currently the selling price is $80 per unit and demand is 1 unit. For every $10 change in price, demand will
change by 1 unit. Variable cost is $40 per unit and is constant on per unit. Fixed cost $10 for the period.

How many units should be sold in order to maximize the profit?

Question#4:-

A company currently sells its product at a price of $70 per unit. If the company reduces the selling price by 20% then the
demand will rise by 2,600 units. The marginal cost of making a unit is $30. Currently the company sells 5,000 units. Fixed
cost is $92,000.

Required:

(a) Prepare the demand equation.

(b) Determine the quantity to maximize profit.
(c) Determine the optimum selling price to maximize the profit and show the value of profit.

Question#5:-

A company is the monopoly producer of Product T. The product is currently sold ata price of $16 and annual sales
demand at this price is 80,000 units. Total annualfixed costs are $750,000 and variable costs are $5 per unit.

It has been estimated that if the sales price is increased, sales demand would fall by2,500 units for every $1 increase in
price. Similarly, if the sales price is reduced,demand would increase by 2,500 units for every $1 reduction in the price.

Required:

(a) Calculate the annual profit at current sales price.

(b) Calculate the sales price and output quantity that maximize the annual profit, and calculate the amount of that
profit.

Pricing 1 Haris Hanif

JUNE 2011 (HEAT COMPANY)

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