Initially,
Cost price of 1 ad= $20
Selling price of 1 ad= $100
profit on 1 ad=selling price = cost price
=$(100- 20)
=$80
Profit on 1 million ads= $80 * 1,00,00,000
=$80,00,00,000
Compute the new selling price, using the equation as shown below:
New price = Existing price*(1 – Decrease in price)
= $100*(1 – 0.10)
= $90
Hence, the new price is $90.
Compute the units sold to earn same profit, using the equation as shown below:
Units sold = Contribution/ (New selling price – Variable cost)
= $80,000,000/ ($90 - $20)
= 1,142,857
Hence, the units sold to earn the same profit is $1,142,857.
A big ads agency normally sells 1 million of ads at $100 per ad. 1) Suppose...
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