Petrox Oil Co.’s marketing sales director doesn’t think that the market for the firm’s goods is big enough to sell enough units to make the company’s target operating profit of $20,000,000. In fact, she believes that the firm will be able to sell only about 175,000 units. However, she also thinks the demand for Petrox Oil Co.’s product is relatively inelastic, so the firm can increase the sale price. Assuming that the firm can sell 175,000 units, what price must it set to meet the CFO’s EBIT goal of $20,000,000?

Answer rating: 100% (QA)

SOLUTION To calculate the price that the firm must set to meet the target operating profit we need t... View the full answer