You work at a firm that makes fountain pens. The marginal cost of producing a fo

Question

You work at a firm that makes fountain pens. The marginal cost of producing a fountain pen at your firm is given by the equation:

MC = 5 + .01q

The price people will pay for a fountain pen varies from year to year depending on what happens at the annual hipster convention. There, a buffalo nickle is flipped and in years when it lands "tails" up, the price of a fountain pen will be $50, however in all other years the price will be $40. Sadly, you must make your production decision before these coins are flipped. You do your best to maximize profits by setting E[MR] = MC, but you are always off a bit. What would be the value of changing the timing of your production run in order to know exactly what the price of a fountain pen will be

Explanation / Answer

) I will choose no campaign as I dnt want to sell to the same customers because they are paying between $0 and $50 and our marginal cost is $100, in any case i want customers to pay more then my marginal cost.

b)No we will never choose build value campaign as per the reason stated above rather we will choose expand reach campaign.We will choose expand value as the potential customers are willing to pay between $0 and $ 500 and I always want customers to pay more than my marginal value which is 100.

c)As described above we will choose to run expand reach campaign.

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