A herbal tea producer company has 24 different products in the market, each are produced in one of the 3 factories owned by the company. The weights of the products in monthly sales may vary depending on time of the year (demands of certain products shift to others in each of the 4 seasons), age of the products and market conditions, but yearly aggregate demand has a very strong correlation with the price of the product (Here, we ignore any other factor and assume that the yearly aggregate demand is directly and linearly effected by the price). The company found out that when the price for a packet of 20 herbal tea bags is 10 TL, yearly demand is 175000 packets. When the price increases to 11 TL, demand decreases to 174650 packets. On the cost side, the company has 2900000 TL of yearly administrative costs regardless of the price or the number of units sold, including the rents, depreciation of the buildings and other related assets and salaries of 58 workers (average monthly salary for white-collar and blue-collar workers are 5,000TL and 3,500 TL respectively). Additionally, approximately 67 TL cost per each packet of tea produced and sold (Assume that the total production is equal to total sales for the sake of simplicity). Which of the following shows the revenue function correctly for the yearly aggregate sales of the company? (d is demand, p is price) O a. R(d)= 178500d - 350d^2 O b. R(p)= 510p - (p^2)/350 O c. R(d) = 510d - (d^2)/350 O d. R(p) = 178500p - (p^2)/350 O e. R(d)= 178500d - (d^2)/350
A herbal tea producer company has 24 different products in the market, each are produced in one of the 3 factories owned by the company. The weights of the products in monthly sales may vary depending on time of the year (demands of certain products shift to others in each of the 4 seasons), age of the products and market conditions, but yearly aggregate demand has a very strong correlation with the price of the product (Here, we ignore any other factor and assume that the yearly aggregate demand is directly and linearly effected by the price). The company found out that when the price for a packet of 20 herbal tea bags is 10 TL, yearly demand is 175000 packets. When the price increases to 11 TL, demand decreases to 174650 packets. On the cost side, the company has 2900000 TL of yearly administrative costs regardless of the price or the number of units sold, including the rents, depreciation of the buildings and other related assets and salaries of 58 workers (average monthly salary for white-collar and blue-collar workers are 5,000TL and 3,500 TL respectively). Additionally, approximately 67 TL cost per each packet of tea produced and sold (Assume that the total production is equal to total sales for the sake of simplicity). Which of the following shows the revenue function correctly for the yearly aggregate sales of the company? (d is demand, p is price) O a. R(d)= 178500d - 350d^2 O b. R(p)= 510p - (p^2)/350 O c. R(d) = 510d - (d^2)/350 O d. R(p) = 178500p - (p^2)/350 O e. R(d)= 178500d - (d^2)/350
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:A herbal tea producer company has 24 different products in the market, each are produced in one of the 3 factories owned by
the company. The weights of the products in monthly sales may vary depending on time of the year (demands of certain
products shift to others in each of the 4 seasons), age of the products and market conditions, but yearly aggregate demand
has a very strong correlation with the price of the product (Here, we ignore any other factor and assume that the yearly
aggregate demand is directly and linearly effected by the price). The company found out that when the price for a packet of
20 herbal tea bags is 10 TL, yearly demand is 175000 packets. When the price increases to 11 TL, demand decreases to 174650
packets.
On the cost side, the company has 2900000 TL of yearly administrative costs regardless of the price or the number of units
sold, including the rents, depreciation of the buildings and other related assets and salaries of 58 workers (average monthly
salary for white-collar and blue-collar workers are 5,000TL and 3,500 TL respectively). Additionally, approximately 67 TL cost
per each packet of tea produced and sold (Assume that the total production is equal to total sales for the sake of simplicity).
Which of the following shows the revenue function correctly for the yearly aggregate sales of the company? (d is demand, p
is price)
O a. R(d)= 178500d - 350d^2
O b. R(p)= 510p - (p^2)/350
O c. R(d) = 510d - (d^2)/350
O d. R(p) = 178500p - (p^2)/350
O e. R(d)= 178500d - (d^2)/350
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education