In 2019, John Deere sold 1,500 tractors at an average price of $5,000. This produced $7,500,000 in
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Question:
In 2019, John Deere sold 1,500 tractors at an average price of $5,000. This produced $7,500,000 in sales and $3,487,000 in gross profits. (10 Points)
Answer a, b and the Bonus Question below based on this data:
US Tractor Market | ||
Change in Price | -4.50% | |
PERFORMANCE | Current | Analysis |
Market Demand | 25,000 | 25,000 |
Market Share | 6% | |
Average Price | $5,000 | $4,775 |
Volume Sold | 1,500 |
|
SALES | $7,500,000 |
|
Unit Cost | $2,675 | $2,675 |
Cost of Goods Sold | $4,012,500 | $4,213,125 |
Gross Profit | $3,487,500 |
|
If John Deere lowered the price to $4,775 and sales volume increased by 5%, what would be their new sales (volume and $) and profits?
Is this a good decision?
BONUS (5 points):
For this price decrease to just maintain current profits, how many units would they have to sell?
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