Assignments:
1. The retailer ValueX is considering a 33 % drop in the price it charges for its blenders. Each blender is currently priced at $54. The retailer pays $29 per blender from the manufacturer.
(a) What is the initial contribution margin for ValueX?
(b) What is the break-even change in sales of the blenders that must be achieved for the drop in price of the blenders to improve ValueX's profit?
(c) Suppose instead a pricing expert suggests that the price of the blenders be increased to $59.
What is the break-even change in sales of the blenders that would leave the retailer in a more profitable position?
(d) Suppose ValueX knows that the elasticity of demand at its current price point of $54 is 50%. Which strategy (the 33% drop or increase to $59) should ValueX adopt?
Attachment:- Assignment.rar