Due to the recent drop on oil price, the logistics cost for the standard printer

Question

Due to the recent drop on oil price, the logistics cost for the standard printer has decreased. This increases the profit margin of the standard printer by $2 per unit, but there is no change to the professional printer margin. What is the impact on the optimal product mix and profits? O There is no impact on the optimal product mix and the total profits. should produce more standard printers and the profits will increase. O The company should produce the same product mix, but the profit will down by $1500 O The company should produce the same product mix, but the profit will go up by $6000.

Explanation / Answer

The company should produce more standard printer and the profits will increase.

As in such a case, even if the profit margin from professional printer won’t increase, larger production of standard printers and subsequent sale of those standard printers would help in increasing the profits.

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