Find all School-related info fast with the new School-Specific MBA Forum

 It is currently 05 May 2015, 18:01

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# Peter s Pots Inc. was in the wholesale business of selling

Author Message
TAGS:
Manager
Joined: 04 Sep 2005
Posts: 142
Location: Fringes of the Boreal, Canada
Followers: 1

Kudos [?]: 4 [0], given: 0

Peter s Pots Inc. was in the wholesale business of selling [#permalink]  01 Feb 2007, 17:01
Peterâ€™s Pots Inc. was in the wholesale business of selling pots for non seasonal plants. The following info is given about the company:

sales $13,600 profit$1088
volume sold 6800

With respect to pricing, a two percent decrease in the retail price of pots would result in a four percent increase in the volume sold. Similarly, a two percent increase in the price would cause a four percent decrease in the volume sold. At what price per pot would the firm maximize profit?
_________________

"To hell with circumstances; I create opportunities." - Bruce Lee

Senior Manager
Joined: 04 Jan 2006
Posts: 280
Followers: 1

Kudos [?]: 20 [0], given: 0

Profit = Sales - Cost

1088 = 13,600 - Cost

Cost = 13,600 - 1,088 = 12,512

Cost/pot = 12,512/6,800 = 1.84 {the cost of production will not change}
Profit/pot = 1,088/6,800 = 0.16
Sales/pot = 13,600/6,800 = 2

Case 1:
2% decrese Sales/pot (0.98 x 2 = 1.96) will make 4% increase in the volume sold (1.04 x 6,800 = 7,072)

Proft 2 = 7,072(1.96 - 1.84) = $848.64 Case 2: 2% increase Sales/pot (1.02 x 2 = 2.04) will make 4% decrease in the volume sold (0.96 x 6,800 = 6,528) Profit 3 = 6,528(2.04 - 1.84) =$1,305.6

From this we can see that at Retail price increase 2% = $2.04 will generate the maximum profit. [#permalink] 02 Feb 2007, 16:43 Similar topics Replies Last post Similar Topics: 10 A retailer purchases shirts from a wholesaler and then sells the shirt 11 23 Mar 2015, 05:41 9 A computer wholesaler sells eight different computers and each is pric 3 11 Dec 2014, 05:57 4 A wholesaler wishes to sell 100 pounds of mixed nuts at$2.50 a pound. 6 26 Nov 2014, 06:45
A candy wholesaler needs to quickly sell some candy bars 4 23 Nov 2010, 09:54
3 A candy wholesaler needs to quickly sell some candy bars 8 09 Aug 2009, 08:51
Display posts from previous: Sort by

# Peter s Pots Inc. was in the wholesale business of selling

 Powered by phpBB © phpBB Group and phpBB SEO Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.