MAT10706: Impact of Price Reduction on Revenue - Demand Equation - Management Assignment Help

Assignment Task:

Question 1 Impact of changing price upon revenue and profit 

A factory worker makes toys for children. One of the more popular toys is marionette puppets (or ‘puppets on strings’). Each puppet requires wooden body parts and cross pieces, clothing and four strings. The worker uses three types of wood – Pine, Cedar and Jarrah. Once the puppets are assembled and sold, they are distributed to toy shops for sale. Puppets are assembled and sold as follows: 

Pine Cedar Jarrah Cost of wooden body parts and cross pieces 

$15.00 $26.00 $38.00 

Cost of clothing $12.50 $15.00 $18.00 Cost of strings (for two) $5.00 $5.00 $5.00 Sale price range $45 - $60 $55 - $70 $75 - $90 

Regardless of the type of wood used to make a puppet, there are fixed production costs of $250. 

Your task is to investigate the cost, revenue and profit associated with each type of truck. 

Steps to complete the investigation 

1. Find the total cost and total revenue functions for each type of puppet and plot these functions on an Excel graph (i.e. you will produce 3 graphs, each with two lines on it). For the revenue function, select a price for each puppet within the price ranges in the table above. 

2. Confirm any points of intersection between the cost and revenue function lines using algebra. Express your answer in co-ordinate form. 

3. Profit will also differ for each puppet. Find the profit functions and the break-even point for each puppet. 

4. Summarise your findings in 200 words. In your conclusion: 

a. Explain the meaning and significance of any points of intersection noted from steps 1 and 2 and any similarities noted from you results in step 3. 

b. Discuss any differences in profitability between each type of truck (for example, which truck  would be easiest to make a profit from?) 

c. Note any assumptions you have made and any limitations of your findings. 

Question 2 Impact of price reduction on revenue 

A department store is known for its seasonal clothing range. One year, winter is warmer than usual, so the store is left with excess winter clothing that it needs to sell off. To clear this excess stock, the store holds a sale. As part of that sale, the store manager reduces the price of jumpers by $15 per customer. 

The supply and demand equations are given by Demand Equation: p = 145 − 8aq Supply Equation: p = 0.00004q2 + 15bq + 40 

where q is the number of customers (in hundreds per year) ; p is the price of jumpers in dollars. a and b are coefficients to be chosen below. 

Your task is to determine the impact of the $15 price reduction on revenue. 

Steps to complete the investigation 

1. Select two random numbers for a and b between 0.1 and 0.9 inclusive. 

2. Find the equilibrium price and quantity algebraically, without the price decrease. 

3. Update the demand equation to include the $15 price decrease. 

4. Use algebra to find the new equilibrium price and quantity. 

5. Use Excel to graph on the same set of axes, the original supply and demand equations (from part 1) and the updated demand equation with the proposed price decrease (part 3). 

6. Use your results to complete the following summary table. Round answers to two decimal places, except for total revenue amounts which round to 0 decimal places. 

7. Summarise your findings in 300 words. In your conclusion: 

a. Discuss the effect of the price reduction on price, quantity and revenue

b. Provide advice to the store on whether to proceed with the price decrease or not. Note any assumptions you have made and any limitations of your findings. 

This MAT10706: Management Assignment has been solved by our Management Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.