Suppose that the company can choose between two suppliers

Question

A) Suppose that the company can choose between two suppliers for their good.

Supplier ABC supplies at a cost to the company given by 𝐶1 = 200 + 4𝑃

Supplier XYZ supplies at a cost to the company given by 𝐶2 = 150 + 8𝑃

Find an expression for 𝑃1, the profit the company expects to make if they choose supplier ABC and an expression for 𝑃2, the expected profit if they choose supplier XYZ.

Answer 1

abc has profit = revenue minus cost = P1 = R - 200 -4P

xyz has profit = P2 = R -150 -8P