How to utilize stay-even analysis

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A company currently sells 1,000 units a year at $25 per unit. The marginal cost of each unit is $12. The company is considering lowering the price by 4%. The company believes that this price discount will increase its economic profits. It has also estimated that, at its current sales level, if price is increased by 1% then the quantity of units demanded by customers will drop 1.22%. You are a member of the marketing department that is making a final decision on this 4% price discount. Utilizing stay-even analysis, state whether you support this price discount.

Reference no: EM13205157

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