ECON600 assignment 3 latest
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From Dr. Leiter--This is perhaps the most
challenging of the 12 Assignments, but don't get frustrated with the math.
We'll get though it together if you are experiencing difficulty.A television station is considering the sale of promotional
DVDs. It can have the DVDs produced by one of two suppliers. Supplier A will
charge the station a set-up fee of $1200 plus $2 for each DVD; supplier B has
no set-up fee and will charge $4 per DVD. The station estimates its demand for
the DVDs to be given by Q = 1,600 - 200P, where P is the price in dollars and Q
is the number of DVDs. The price equation is P = 8 -Q/200.
A. Suppose the station plans to give away the videos. How many
DVDs should it order? From which supplier?
B. Suppose instead that the station seeks to maximize its profit
from sales of DVDS. What price should be charged? How many DVD should it order
from which supplier?
Directions: You must solve two separate problems, one with supplier A and one with supplier B, and then compare profits. As the textbook explains (P. 42-47), maximum profit is found where Marginal Revenue (MR) to Marginal Cost (MC). Here, you need to set MR=MC for each supplier and compare the maximum profit attainable for each.
Directions: You must solve two separate problems, one with supplier A and one with supplier B, and then compare profits. As the textbook explains (P. 42-47), maximum profit is found where Marginal Revenue (MR) to Marginal Cost (MC). Here, you need to set MR=MC for each supplier and compare the maximum profit attainable for each.
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