Return to the Ready-To-Eat Cereal Example from the Previous Question

question 22

Multiple Choice

Return to the ready-to-eat cereal example from the previous question. Now assume that there is only one kind of cereal,so the manufacturer cannot distinguish between types of consumer (adults vs.children,of which suppose there are equal numbers in the market) . What is the optimal menu of cereal boxes?

• A)a 3 ounce box (which adults will buy) sold for 48 cents; a 4 ounce box (which children will buy) sold for $1.12.
• B)a 3 ounce box (which adults will buy) sold for 48 cents; a 4 ounce box (which children will buy) sold for 64 cents.
• C)a 2 ounce box (which adults will buy) sold for 36 cents; a 4 ounce box (which children will buy) sold for 76 cents.
• D)No menu; the manufacturer is better off just selling a 5 ounce box for $1.12,which is only purchased by children.

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Definitions:

Earning Revenue

Earning revenue refers to the total amount of money earned or income generated from a company's normal business activities before any costs or expenses are deducted.

Monetary Value

The value of an asset, service, or amount expressed in terms of money.

Performance of Services

The execution of tasks or provision of work that delivers value to clients or customers, typically in exchange for payment.

Revenue

The income earned by a company from its business activities, typically from the sale of goods or services.