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A small firm is looking at various solutions to remain competitive
and profitable. Current financials for the firm are shown in the table below. In the first option, marketing will increase sales by 50%. There is also an OM option, which would reduce production costs 25%. Which of the two options would you recommend to the firm if it can only pursue one option?
Business Function Current Value
Cost of Inputs $50,000
Production Costs $25,000
Revenue $80,000
OM option because it increases the profit by $5000
OM option because it increases the profit by $2500
Marketing option because it increases the profit by $6250
OM option because it increases the profit by $6250
Marketing option because it increases the profit by $2500
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