Your Firm Sells Club Soda in Both Grocery Stores and Convenience

question 92

Short Answer

Your firm sells club soda in both grocery stores and convenience stores. You have a budget of $550 for store displays, and must decide how to allocate this budget between grocery stores and convenience stores to maximize the total number of sales. The following table shows the total number of units that can be sold in grocery stores and convenience stores, according to the number of displays in each type of store. Displays in grocery stores cost $150 each and displays in convenience stores cost $100 each.
$\begin{array}{cccc} & & \text { Number of } \\\text { Nimber of } & \text { Total number of } & \text { displays in } & \text { Total number of } \\\text { displays in } & \text { units sold in } & \text { convenience } & \text { units sold in } \\\text { grocerv stores } & \text { grocerv stores } & \text { stores } & \text { convenience stores }\\\hline1&500&1&400\\2&900&2&780\\3&1,250&3&1,130\\4&1,550&4&1,460\\5&1,750&5&1,760\\6&1,850&6&1,960\end{array}$
a. With $550 to spend, the total number of units sold will be maximized by choosing ______ displays in grocery stores and ______ displays in convenience stores. With $550 to spend, the maximum number of units that can be sold is ________.
b. Suppose your firm can spend $1,200 on store displays. The total number of units sold will be maximized by choosing ______ displays in grocery stores and ______ displays in convenience stores. The maximum number of units that can be sold is ________.

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Definitions:

Substitutes

Goods or services that can replace each other in use, whereby an increase in the price of one leads to an increase in demand for the other.

Quantity Of Zero

A condition where the quantity of a good or service supplied or demanded is zero, often due to a price set below or above the market equilibrium.

Current Demand

The existing desire or need for a product or service within a market at a specific point in time.

Complements

Goods or services that are used together, where an increase in the consumption of one leads to an increase in the consumption of the other.