2. A Scandinavian wind turbine manufacturer is attempting to understand the profit impact of a price change on turbines. Currently a 1.5 megawatt wind turbine has a total price of $1.7million to an electric generator but faces only 1.3 million in marginal cost to deliver.
? What is the initial gross margin? ? A 3% price cut is being considered, what would be the new price and the volume hurdle to
be cleared for the price change to improve profits? ? A 3 % price increase is being considered, what would be the new price and what would be
the allowable loss in sales volume for the price change to improve profits? ? For discussion: A US competitor is selling comparable turbines for $1,675,000: they have
only 20% of the market where the Scandinavian manufacturer has 50%. In consideration of the competitors price should the Scandinavian manufacturer raise or lower prices by 3%?