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Chapter 5
Example 1
XYZ Limited is a car manufacturer introducing a new type of car in a market
where there is imperfect competition, so that to sell more units of output, it
must reduce the sales price of all the units it sells. The following data is
available for prices and costs (all in $000):
Price per unit Demand/output units Total cost
50.00 1 44.00
47.00 2 56.00
44.00 3 71.00
41.00 4 85.00
38.00 5 95.00
35.00 6 110.00
32.00 7 122.00
29.00 8 135.00
26.00 9 145.00
Complete the table below to determine the output level and price at
which the organisation would maximise its profits:
Price Demand/ Total MR Total MC Profit
per unit output units revenue cost
50.00 1 50.00 50.00 44.00 44.00 6.00
47.00 2 94.00 44.00 56.00 12.00 38.00
44.00 3 132.00 38.00 71.00 15.00 61.00
41.00 4 164.00 32.00 85.00 14.00 79.00
38.00 5 190.00 26.00 95.00 10.00 95.00
35.00 6 210.00 20.00 110.00 15.00 100.00
32.00 7 224.00 14.00 122.00 12.00 102.00
29.00 8 232.00 8.00 135.00 13.00 97.00
26.00 9 234.00 2.00 145.00 10.00 89.00
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