A Company Makes Two Types of Telephone Answering Machines: the Standard

question 79

Multiple Choice

A company makes two types of telephone answering machines: the standard model and the deluxe model. Each machine passes through three processes: $P _ { 1 } ,$ $P _ { 2 }$ and $P _ { 3 }.$ One standard answering machine requires 1 hour in $P _ { 1 } ,$ 4 hours in $P _ { 2 },$ and 3 hours in $P _ { 3 }.$ One deluxe answering machine requires 3 hours in $P _ { 1 } ,$ 5 hours in $P _ { 2 },$ and 1 hour in $P _ { 3 }.$ Because of employee work schedules, $P _ { 1 }$ is available for 24 hours, $P _ { 2 }$ is available for 47 hours, and $P _ { 3 }$ is available for 27 hours. If the profit is $22 for each standard model and $23 for each deluxe model, how many units of each type should the company produce to maximize profit?

• A)8 standard models and 3 deluxe models
• B)9 standard models and 0 deluxe models
• C)8 standard models and 0 deluxe models
• D)0 standard models and 8 deluxe models
• E)3 standard models and 7 deluxe models

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Definitions:

Price Discrimination

A pricing strategy where a business charges different prices to different customers for the same product or service, based on what the seller believes the customer is willing to pay.

Producer

An individual or organization that creates goods or services to sell to consumers.

Price Discrimination

The strategy of selling the same product or service at different prices to different groups of consumers, typically based on willingness to pay.

Deadweight Loss

A loss in economic efficiency that occurs when the equilibrium output is not achieved or when supply and demand are out of balance.