question archive Consider a company that makes knives used in food preparation
Consider a company that makes knives used in food preparation
Subject:AccountingPrice: Bought3
Consider a company that makes knives used in food preparation. The company produces two different brands of knives, a "low-end" consumer-grade version, and a "high-end" professional-grade version. The company has segmented their consumers into two groups: home chefs and restaurant chefs. There are 40,000 potential home chefs and 6,000 potential restaurant chefs in their customer base. Based on some market research, it has determined that the most that these customers are willing to pay for the different types of knives is as follows: Restaurant Chefs (40,000 (6,000 customers) customers) Home Chefs Consumer-grade knife Professional-grade knife € 40 € 70 € 60 € 140 Each consumer-grade knife costs €20 to produce, while each professional-grade knife costs €50 to produce. You can assume there are no other costs. a. If the company wants to sell only the consumer-grade version, what price should it charge? What will their profits be? b. If the company wants to sell only the professional-grade version, what price should it charge? What will their profits be? c. If the company just wants to maximize profits overall, which product or products should it sell? How much should it charge? What will total profits be?
