Neco Model Questions Vol1 2018 Commerce Question 3

Practice essay / theory question 3 from the 2018 Neco Model Questions Vol1 Commerce examination. This question covers Home Trade, Pricing, Elasticity of Demand .

Neco Model Questions Vol1 2018 Commerce Essay / Theory
Topics: Home Trade Pricing Elasticity of Demand
Question 3 NECO_MODEL_QUESTIONS_VOL1 • 2018 • COMMERCE • essay

A retailer purchases a batch of 500 units of a fashion accessory at a total cost of ₦250,000. The retailer intends to apply a markup on the cost price and then offer a discount to customers. The retailer’s target profit after discount is ₦75,000. In addition, market research indicates that the price elasticity of demand for the accessory is –1.5.

Question Parts

( a )
Calculate the unit cost price of the accessory.
( b )
If the retailer marks up the unit cost price by a constant percentage before discount, and then offers a 10 % discount on the marked‑up price, determine the required markup percentage that will enable the retailer to achieve the target profit of ₦75,000.
( c )
Assuming the retailer decides to raise the final selling price (after discount) by 10 % without changing the discount rate, estimate the new quantity demanded using the given price elasticity, and compute the resulting total revenue. State whether the change increases or decreases revenue.

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About This Question

This is Neco Model Questions Vol1 2018 Commerce Question 3. It is one of the essay questions from the 2018 Neco Model Questions Vol1 Commerce examination.

The question covers Home Trade, Pricing, Elasticity of Demand .

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