A Stationary Store Sells Rolls of Standard Gift Wrap and Deluxe

question 51

Short Answer

A stationary store sells rolls of standard gift wrap and deluxe gift wrap. They can stock a total of 180 rolls of gift wrap, of which at least 50 must be standard wrap and at least 20 must be deluxe wrap. The profit on a roll of standard wrap is $3 and the profit on a roll of deluxe wrap is $6. How many rolls of each type of gift wrap should the store stock to maximize their profit?

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Definitions:

Diseconomies of Scale

A condition in which a firm experiences an increase in average costs as it increases its output, due to factors such as inefficiencies or complexity.

Marginal Product

The change in total output that results from the employment of one additional unit of a resource.

Marginal Cost

Represents the change in total production costs resulting from making one additional unit of a product or service.

Economies of Scale

Advantages in cost that businesses gain from expanding their production scale, leading to a decrease in the average cost per unit produced as the operation size grows.