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A television station is planning the sale of promotional dvds. It can have the dvds manufactured by one of two suppliers. Supplier A will charge the station a set up fees of $1200 plus $2 for each dvds; 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 = 1600 - 200P, where p is the price in dollars and Q is the number of dvds. (the price equation is P = 8 - Q/200.)
[A] Assume that the station plans to give away the videos. How many dvds should it order? From which supplier?
[B] Assume instead that the station seeks to maximize its profit from sales of the dvds. What price should it charge? How many dvds should it order from which supplier? (Suggestion: Solve two separate problems, one with supplier A and one with supplier B, and then compare profits. In each case, apply the MR=MC rule.)
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A manager at strateline manufacturing much choose between twoshipping alternatives: two day freight and five-day freight. Using five day freight would cost $135 less than using two day frieght.
Consider some of products which are widely advertised on television. By what type of firm is each produced the perfectly competitive firm, an oligopolistic firm, or another kind of firm? How many major products can you think of that are not advert..
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