Cloud Cafe is considering the sale of promotional mugs. It can have the mugs produced by one of two suppliers. Supplier A will charge them a setup fee of Php13000 plus Php40 for each mug; Supplier B has no setup fee and will charge Php60 per mug. The company estimates its demand for mugs to be given by Q=32000-400P, where P is the price in Philippine peso and Q is the number of mugs (hint: the price equation is P=80-0.0025Q). In order to make sound decisions, the company's management asked the assistance of their student trainees from FEU in assessing the cost and revenue implications of the promotional campaign. 1. If the company wants to give the mugs away for free, how many mugs should it order? 2. What is the company's marginal cost if Supplier A is chosen? 3. What is the company's marginal cost if supplier B is chosen?
Cloud Cafe is considering the sale of promotional mugs. It can have the mugs produced by one of two suppliers. Supplier A will charge them a setup fee of Php13000 plus Php40 for each mug; Supplier B has no setup fee and will charge Php60 per mug. The company estimates its
1. If the company wants to give the mugs away for free, how many mugs should it order?
2. What is the company's marginal cost if Supplier A is chosen?
3. What is the company's marginal cost if supplier B is chosen?
4. If the company seeks to maximize profit from selling mugs and Supplier A is chosen, how many mugs should the company order?
5. If the company seeks to maximize profit from selling mugs and Supplier B is chosen,
how many mugs should the company order?
6. If the company seeks to maximize profit from selling mugs and Supplier A is chosen,
at what price should they sell each mug?
7. If the company seeks to maximize profit from selling mugs and Supplier A is chosen,
at what price should they sell each mug?
8. If Supplier A is chosen, the company's total cost function is?
9. If Supplier B is chosen, the company's total cost function is?
10. What is the company's marginal revenue function?
11. If the company desires to maximize profit by choosing Supplier A, compute for the following:
A. Total Revenue
B. Total Cost
C. Profit
11. If the company desires to maximize profit by choosing Supplier B, compute for the following:
A. Total Revenue
B. Total Cost
C. Profit
Step by step
Solved in 2 steps
