MAC PEV and PCR Revision Game

A-Vic

Bumped

Sandy Was i close when i answered last please?

SandyHood

I had a different sequence

a firm reduces the price charged for the products produced and sold?

Lower price leading to increased sales volume
increased sales volume leads to increased production
increased production leads to increased material purchasing
increased purchasing enables negotiation of discounted cost price on raw materials leaing to lower variable cost per unit

Also increased volume leads to fixed cost being spread more thinly leading to lower cost per unit

Whether this leads to an increased gross profit margin or a lower margin will depend on the effects of the variables in the specific situation.

A-Vic

Thanks Sandy