Instructions

A dealer deals only in colour TVs and VCRs. He wants to spend up to Rs.12 lakhs to buy 100 pieces. He can purchase a colour TV at Rs.10,000 and a VCR at Rs.15,000. He can sell a colour TV at Rs.12,000 and a VCR at Rs.17,500. His objective is to maximize profits. Assume that he can sell all the items that he stocks.

Question 27

If the dealer would have managed to get an additional space to stock 20 more items, then for maximizing profit, the ratio of number of VCRs and number of TVs that he should stock is

Solution

As we know for maximizing profit, Total Revenue = Marginal Cost
i.e. $$T \times 10000 + V \times 15000 = 1200000$$
and $$T+V = 120$$
By solving above two equations we will get
$$T=120$$
$$V=0$$
Hence ratio will be 0.

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If the dealer would have managed to get an additional space to stock 20 more items, then for maximizing profit, the ratio of number of VCRs and number of TVs that he should stock is

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