Suppose That Samsung's Production Costs Are the Same in Both

question 33

Multiple Choice

Suppose that Samsung's production costs are the same in both China and India.Also suppose that Samsung can produce cellphones in China for an average cost of $10 per phone for 300 million phones, $12 per phone for 200 million phones, and $15 per phone for 100 million phones.If customers in India demand 100 million phones and customers in China demand 200 million phones, and there are transportation costs of $6 per phone, Samsung's lowest cost option is to

• A) produce phones only in India and export phones to China.
• B) produce phones only in China and export phones to India.
• C) produce 100 million phones in India for Indian demand and produce 200 million phones in China for Chinese demand.
• D) produce 150 million phones in India for Indian demand and 50 million to export to China and produce 150 million phones in China for Chinese demand.

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Definitions:

Product Set

A collection of products that a company manufactures or sells, often related in usage or marketed under a single brand.

Pricing Strategies

Plans developed by companies to determine the most appropriate price for their products or services, aiming to maximize profitability and market share.

Product Life Cycle

The stages through which a product goes from its initial concept and development, through its marketing, growth and peak sales, to its eventual decline and discontinuation.

Underpricing

The strategy of setting a price lower than the market value or cost of a product or service, often used to attract customers or gain market share.