Determine the optimal number of bran muffins to sell

Assignment Help Financial Management

Reference no: EM13804997

The American Baker’s Association reports that annual sales of bakery goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent certain types of cancer. You are the manager of a bakery that produces and packages gourmet bran muffins, and you currently sell bran muffins in packages of three. However, as a result of this new report, a typical consumer’s inverse demand for your bran muffins is now P = 12 - 1.5Q.

If your cost of producing bran muffins is C(Q) = 4.5Q, determine the optimal number of bran muffins to sell in a single package and the optimal package price.

Instruction: Round your answer for the optimal package price to two decimal places.

Optimal package size? units

Optimal package price? $

Reference no: EM13804997

Questions Cloud

Suppose your firm is considering investing in a project with : 1.Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the ..

Overview of bls statistics on unemployment : Review the information available on the following websites. You will use this information to answer the questions below:Overview of BLS Statistics on Unemployment: http://www.bls.gov/bls/unemployment.htmUnemployment, total (% of total labor force): ..

Monopoly is considering selling several units of homogeneous : A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 120 - 0.25P, and the marginal cost of production is $160. Determine the optimal number of units to put i..

The keynesian is-lm model : According to the Keynesian IS-LM model, what is the effect of each of the following onoutput, the real interest rate, employment, and the price level? Distinguish between the short runand the long run. Be sure to express graphically and explain in wo..

Determine the optimal number of bran muffins to sell : The American Baker’s Association reports that annual sales of bakery goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent..

Why might government want to regulate natural monopolies : Describe an example of a real-world industry or market that would be considered by economists to be a natural monopoly. What characteristics of the industry make it a monopoly? What is the impact of the monopoly power on its customers? Why might gove..

A fast growing firm recently paid a dividend of : 1. A fast-growing firm recently paid a dividend of $0.40 per share. The dividend is expected to increase at a 20 percent rate for the next three years. Afterwards, a more stable 10 percent growth rate can be assumed. If an 11 percent discount rate is..

How does monetary policy aim to avoid inflation : What are the factors that would influence the Federal Reserve in adjusting the discount rate? How does the discount rate affect the decisions of banks in setting their specific interest rates? How does monetary policy aim to avoid inflation?

What compensation options are available to employers : What compensation options are available to employers? Describe each. Many have argued that the most important reason for adopting incentive compensation is to communicate to employees how they contribute to the company's success.

User Account

All Pages