A Manufacturer Is Planning to Sell a New Product at the Price

question 14

Multiple Choice

A manufacturer is planning to sell a new product at the price of $230 per unit and estimates that if x thousand dollars is spent on development and y thousand dollars is spent on promotion,approximately $\frac { 340 y } { y + 7 } + \frac { 170 x } { x + 14 }$ units of the product will be sold.The cost of manufacturing the product is $160 per unit.If the manufacturer has a total of $340,000 to spend on development and promotion,how should this money be allocated to generate the largest possible profit? [Hint: Profit equals (number of units) (price per unit minus cost per unit) minus total amount spent on development and promotion.]

• A)$173,500 on development,$167,000 on promotion
• B)$167,000 on development,$173,000 on promotion
• C)$166,500 on development,$173,500 on promotion
• D)$173,000 on development,$167,000 on promotion

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Definitions:

Balance

The difference between the total credits and total debits in an account, or the stability between opposing forces.

Gold Exchange Standard

A monetary system where countries hold reserves in a currency that is convertible into gold but do not exchange currency for gold themselves; instead, the currency can be exchanged for another currency that is convertible into gold at a fixed rate.

Current Account

A component of a country's balance of payments that measures the trade balance, net primary income, and net secondary income with foreign entities.

Deficit

The amount by which expenses or costs exceed income or revenues, commonly associated with governmental budgeting.