(a) Demand function 1·5
Marginal cost/batch 2·5
Labour 1,000th batch 3·5
Establishing MR function 0·5
Solve MR to find Q 1
Use demand function and Q to find P 1
Contribution based on P and Q 1
Deduction of fixed costs 0·5
Profit 0·5
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12

(b) Penetration pricing 3
Skimming pricing 3
Other relevant comments/recommendation 2
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8