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Mkt 300 Assignment 1

# Mkt 300 Assignment 1 - Kate Eichman Marketing 300...

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Kate Eichman Marketing 300 Discussion Section: 309 10/12/11 Assignment 1 1. Considering the two price levels, \$90 and \$60, the better price level is \$60 . Since profit = unit contribution margin x quantity – fixed expense and unit contribution margin = price – unit variable cost we can find the following data: Price Quantity \$40 1 \$50 2 \$60 4 \$90 1 \$120 2 Based off the customer and value chart we can see three people are willing to buy the product at \$90 while seven people are willing to buy the product at \$60. \$90 price level: P = (\$90 - \$20) x 3 = \$210 \$60 price level: P = (\$60 - \$20) x 7 = \$280 Therefore we can determine the \$60 price level is more profitable since it will make \$280 while the \$90 price level will only make \$210. Price Quantity \$100 1 \$90 2 \$80 1 \$70 1 \$50 1 \$40 4 \$30 1 \$20 1 2a. Customer WTP 1 90 2 100 3 90 4 70 5 80 6 50 7 40 8 40 9 40 10 30 11 40 12 20

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\$80 Price Level: P = (\$80 - \$10) x 4 = \$280 \$50 Price Level: P = (\$50 - \$10) x 6 = \$240 Therefore we can determine the \$80 price level is more profitable since it will make \$280 while the \$50 price level will only make \$240.
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Mkt 300 Assignment 1 - Kate Eichman Marketing 300...

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