Final answer:
To determine the price for the additional units during the 'Customer Appreciation Sale,' Steve should calculate the marginal cost and set the price slightly above it in order to attract customers and maintain the firm's profitability.
Step-by-step explanation:
In order to determine the price that should be charged for the additional units during the 'Customer Appreciation Sale,' Steve, the sales manager for TL Products, needs to strike a balance between offering a low price to attract customers and ensuring that the firm's profits are not negatively affected.
One way to achieve this is to calculate the marginal cost and set the price slightly above it. Marginal cost is the cost per additional unit sold, and it can be calculated by dividing the change in total cost by the change in quantity.
For example, if TL Products normally sells 10 units of the product at $9 each, and the total cost for producing those 10 units is $90, then the marginal cost for each additional unit would be $9.
Steve should set the price for the additional units slightly above the marginal cost, taking into consideration factors such as competition, market demand, and customer expectations. By doing so, he can maximize sales while still maintaining the firm's profitability.