1) The management of Thompson Controls must decide between three processes for its model D electronic thermostat. The monthly cost of the first process is given by C(x) = 200x + 15,000 dollars, where x is the number of thermostats produced; Their marketing department has recently done a survey showing that they can set a price of $58 per thermostat and expect the demand of 2500. Another possibility is for them to consider a lower quality product with a monthly cost of C(x) = 15x + 20,000 and the demand of 3000 units. In case of the second process, the selling price should not be more than 85% of $58. 1) What is your recommendation as their business analysis advisor? 2) How much is their monthly revenue? (based on your answer in part 1)

1) The management of Thompson Controls must decide between three processes for its model D electronic thermostat. The monthly cost of the first process is given by C(x) = 200x + 15,000 dollars, where x is the number of thermostats produced; Their marketing department has recently done a survey showing that they can set a price of $58 per thermostat and expect the demand of 2500. Another possibility is for them to consider a lower quality product with a monthly cost of C(x) = 15x + 20,000 and the demand of 3000 units. In case of the second process, the selling price should not be more than 85% of $58. 1) What is your recommendation as their business analysis advisor? 2) How much is their monthly revenue? (based on your answer in part 1)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition

Section: Chapter Questions

Problem 3E

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