Tacky Wedding Planners (TWP) are halfway through a year-long contract to lease stretch limousines to act as wedding cars at an average total cost of €400 per week. Operating costs come to €300 per week for each limousine. Currently, TWP’s weekly revenue averages €550 per limousine. Costs and revenues are not expected to change over the next five years. What should TWP do if it wishes to maximise profits? A. Discontinue the wedding car service immediately. B. Continue providing wedding cars for the next five years. C. Continue providing wedding cars until the lease contract expires, then discontinue the service. D. None of the above. E. Not enough information to determine
Tacky Wedding Planners (TWP) are halfway through a year-long contract to lease stretch limousines to act as wedding cars at an average total cost of €400 per week. Operating costs come to €300 per week for each limousine. Currently, TWP’s weekly revenue averages €550 per limousine. Costs and revenues are not expected to change over the next five years. What should TWP do if it wishes to maximise profits? A. Discontinue the wedding car service immediately. B. Continue providing wedding cars for the next five years. C. Continue providing wedding cars until the lease contract expires, then discontinue the service. D. None of the above. E. Not enough information to determine
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter22: Getting Divisions To Work In The Firm’s Best Interests
Section: Chapter Questions
Problem 22.3IP
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Tacky Wedding Planners (TWP) are halfway through a year-long contract to lease stretch limousines to act as wedding cars at an average total cost of €400 per week. Operating costs come to €300 per week for each limousine. Currently, TWP’s weekly revenue averages €550 per limousine. Costs and revenues are not expected to change over the next five years. What should TWP do if it wishes to maximise profits?
A. Discontinue the wedding car service immediately.
B. Continue providing wedding cars for the next five years.
C. Continue providing wedding cars until the lease contract expires, then discontinue the service.
D. None of the above.
E. Not enough information to determine
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