Question B5 Happy Bubble Tea, Inc., has been granted a restrictive licensing and operates a chain of bubble tea stalls in Country A. Happy Bubble Tea, Inc. has its inverse demand function of P = 40 -0.004Q, with both its marginal cost and average total cost of $16 per cup under the existing operation. (a) With the aid of a diagram, calculate the profit-maximising level of output and price and profit. (b) The license of Happy Bubble Tea is going to be expired, what impact do you think this will have on the market for bubble tea and Happy Bubble Tea's profits? (c) What procurement method will you suggest Happy Bubble Tea to purchase the tea bags it used for making its bubble tea from its suppliers? Explain.

Question B5 Happy Bubble Tea, Inc., has been granted a restrictive licensing and operates a chain of bubble tea stalls in Country A. Happy Bubble Tea, Inc. has its inverse demand function of P = 40 -0.004Q, with both its marginal cost and average total cost of $16 per cup under the existing operation. (a) With the aid of a diagram, calculate the profit-maximising level of output and price and profit. (b) The license of Happy Bubble Tea is going to be expired, what impact do you think this will have on the market for bubble tea and Happy Bubble Tea's profits? (c) What procurement method will you suggest Happy Bubble Tea to purchase the tea bags it used for making its bubble tea from its suppliers? Explain.

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

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 8E

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