Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 21 Mar 2018 My Price 4.00

supplier profits

14.     Modifying a product to increase its “value added” benefits customers and can also enhance supplier profits. For example, suppose an improved version of a product increases customer value added by $25 per unit. (In effect, the demand curve undergoes a parallel upward shift of $25.)

a.    If the redesign is expected to increase the item’s marginal cost by $30, should the company undertake it?

b.   Suppose instead that the redesign increases marginal cost by $15. Should the firm undertake it, and (if so) how should it vary its original output and price?

Answers

Maurice Tutor
(5)
Status NEW Posted 21 Mar 2018 04:03 AM My Price 4.00

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