Redstone Clayworks, Inc. is located in Sedona, Arizona and manufactures clay fire pits for patios. They are one of about two dozen firms around the world that manufacture and sell clay fire pits for retailers such as Home Depot, Lowe’s, Front Gate, and other upscale home product chains. There is virtually no product differentiation. A clay fire pit is a clay fire pit. Assume that the world market demand and supply curves for clay fire pots intersects at $300 per unit. 1. If Redstone wishes to maximize profit margin, how many units should it produce? 2. What level of output should the manager of Redstone choose to produce? Explain your choice in at least 100 words.
Redstone Clayworks, Inc. is located in Sedona, Arizona and manufactures clay fire pits for patios. They are one of about two dozen firms around the world that manufacture and sell clay fire pits for retailers such as Home Depot, Lowe’s, Front Gate, and other upscale home product chains. There is virtually no product differentiation. A clay fire pit is a clay fire pit. Assume that the world market demand and supply curves for clay fire pots intersects at $300 per unit. 1. If Redstone wishes to maximize profit margin, how many units should it produce? 2. What level of output should the manager of Redstone choose to produce? Explain your choice in at least 100 words.
Chapter15: Retailing, Direct Marketing, And Wholesaling
Section15.1: L.l.bean: Open 24/7, Click Or Brick
Problem 3VC
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Redstone Clayworks, Inc. is located in Sedona, Arizona and manufactures clay fire pits for patios. They are one of about two dozen firms around the world that manufacture and sell clay fire pits for retailers such as Home Depot, Lowe’s, Front Gate, and other upscale home product chains. There is virtually no product differentiation. A clay fire pit is a clay fire pit.
Assume that the world market demand and supply curves for clay fire pots intersects at $300 per unit.
1. If Redstone wishes to maximize profit margin, how many units should it produce?
2. What level of output should the manager of Redstone choose to produce? Explain your choice in at least 100 words.
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