Question Tag: Sales Demand

i. The Students Union of a University plans to have an end-of-year party for all its members. The party is scheduled to take place at a major hotel that can accommodate up to 500 persons. The hotel was to charge N800 per person. At this gate fee, the hotel expects to sell 400 tickets. Market research postulates that for every N40 increase or reduction in the ticket price, the demand will fall or increase by 16 tickets.

Required:
If the variable cost per student for the dinner is N210, determine the Marginal Revenue (MR) function.
(6 marks)

ii. JANG PLC produces and sells two products G and H. G and H respectively make contributions of N10 and N15. The company wishes to maximize its profit. 4,150 units and 3,175 units of G and H, respectively, are to be sold. Direct labor hours per unit are 2.5 hours and 1.5 hours for G and H, while machine hours per unit are 45 minutes and 3 hours for G and H, respectively. Total direct labor hours available and total machine hours available are, respectively, 18,000 hours and 10,000 hours.

Required:
Derive the following constraints: the direct labor, machine time, sales demand for G, sales demand for H, and non-negativity constraints. (4marks)